By Adnan Adams Mohammed
The Ghanaian government has injected US$1.47 billion into the energy sector to repair its international reputation, prioritizing the restoration of the World Bank Partial Risk Guarantee.
This measure aims to stabilize the economy and signals a commitment to global capital markets.
The Finance Minister, Dr. Cassiel Ato Forson, has emphasized that the energy sector is a major threat to Ghana’s financial stability, and restoring the PRG is crucial for reviving the US$8 billion Sankofa Gas Project.
He described the energy sector as “one of the gravest threats to Ghana’s financial stability,” noting that the US$500 million (GH₵5.36 billion) guarantee had been completely exhausted by the start of 2025. Restoring this safety net is seen as a prerequisite for reviving the US$8 billion (GH₵85.76 billion) in private sector investment tied to the Sankofa Gas Project.
Consequently, the World Bank’s Country Director, Robert Taliercio O’Brien, has praised Ghana’s efforts but has also stressed the need for long-term structural reforms.
The debt clearance has sparked debate, with the opposition questioning the government’s narrative and emphasizing the need for transparency. The average Ghanaian hopes the investment will stabilize the power grid and reduce outages.
The energy levy, introduced to address sector challenges, has contributed to improved power stability. However, stakeholders call for greater transparency in its utilization.
This bold move could serve as a model for fiscal recovery and energy stability across Sub-Saharan Africa, proving that decisive debt management can restore international partnerships.
A Renewed Framework for Ghana-World Bank Relations
The restoration of the PRG marks a pivot in the diplomatic relationship between Accra and Washington.
Mr O’Brien emphasised that while the debt clearance is a “major milestone,” the focus must now shift toward long-term structural health. The World Bank has signalled that its ongoing commitment to Ghana is contingent on “maintaining fiscal consolidation” and “addressing structural inefficiencies” in the state-owned energy entities.
In a recent policy synthesis, O’Brien noted that the era of recurrent crises and fiscal indiscipline must give way to a “business-friendly environment to stimulate private investment.” This reset is not merely a financial transaction but a commitment to a transparent roadmap for the sector’s future.
Balancing the Ledger of Legacy Debts
A critical component of this fiscal strategy involved the repayment of US$597.15 million (GH₵6.40 billion) to the World Bank and US$480 million (GH₵5.15 billion) in gas invoices to ENI and Vitol. These payments effectively bring Ghana “fully up to date on its obligations to the Sankofa partners.”
The Ministry of Finance stated that the previous depletion of these funds “represented a serious governance failure that undermined Ghana’s international credibility.” However, the sheer volume of this payout roughly GH₵15.76 billion in a single year raises inevitable questions about opportunity costs. While the energy sector finds oxygen, other vital areas like healthcare and education may face tighter budgets due to this concentrated capital flight toward debt servicing.
De-risking the Domestic Financial System
From a systemic view, the US$393 million (GH₵4.21 billion) paid to Independent Power Producers (IPPs) acts as a lifeline for the domestic banking sector.
Dr Johnson P. Asiama, Governor of the Bank of Ghana, recently noted that energy sector arrears remain a “primary driver of financial sector instability” due to their impact on non-performing loans. By clearing these debts to companies like Cenpower and Sunon Asogli, the government is effectively de-risking the balance sheets of local banks.
Energy economist Dr Maxwell Akoto warns, however, that the Cash Waterfall Mechanism the system used to distribute electricity revenues must remain “insulated from political interference” to prevent the debt cycle from restarting.
Blueprint for Sub-Saharan Fiscal Recovery
The World Bank’s validation of this restoration will be critical for Ghana’s future credit ratings and its ability to re-enter international bond markets. By settling these legacy debts, the Mahama administration has moved from a position of default to one of compliance, yet the sustainability of this move remains under the microscope.
As Ghana enters 2026, the global lens is focused on whether this “continued discipline” can be maintained amidst the pressure of domestic growth and political cycles.
If successful, this US$1.47 billion (GH₵15.75 billion) investment could serve as a model for fiscal recovery and energy stability across Sub-Saharan Africa. It proves that decisive debt management can restore even the most fractured international partnerships.
However, the true measure of success will be whether this discipline can be maintained through the current year and beyond.
The Effect of the GH₵1-per-litre Energy Levy
The government has defended the utilisation of proceeds from the GH₵1-per-litre Energy Sector Shortfall and Debt Repayment Levy, saying the policy has contributed significantly to stabilising Ghana’s power supply.
Minister of State in charge of Government Communications, Felix Kwakye Ofosu, said the levy has been effectively applied to address challenges in the energy sector and ensure consistent electricity delivery.
He made the remarks while addressing the press last week, as part of the Government Accountability Series.
“What is clear is that the energy levy has certainly been put to good use and has contributed significantly to achieving stability in the power sector,” Mr Kwakye Ofosu stated.
According to him, the country’s electricity situation has improved markedly compared to earlier periods marked by frequent disruptions.
“When we took over, there were challenges with electricity stability, and I think all of us can attest that for several months now, electricity has been stable. We have not experienced the outages that many had feared would occur,” he added.
The Energy Sector Shortfall and Debt Repayment Levy was introduced as part of measures to clear legacy debts and support the financial sustainability of the power sector. However, it has faced calls for transparency from stakeholders.
