- IMF Flags Concentrated SOE Losses as Ghana Confronts Hidden Public-Sector Balance-Sheet Risk
Ghana’s fiscal consolidation is confronting a problem that sits largely outside the headline budget deficit: state-owned enterprises are carrying increasingly large liabilities while several of the most important entities continue to generate heavy losses.
Ten SOEs recorded combined net losses of GH¢8.8bn in 2024, equivalent to about 1.00% of GDP, according to an IMF assessment cited in the document. Those ten entities accounted for more than 90.00% of total SOE losses, with the Electricity Company of Ghana responsible for an extraordinary 85.00% of the aggregate loss.
The balance-sheet picture is even more consequential. Aggregate liabilities across Ghana’s SOE portfolio reached GH¢282bn in 2024, equivalent to about 25.00% of GDP, compared with GH¢35bn, or 19.00% of GDP, in 2015. The IMF says liabilities have been expanding faster than assets, creating a widening contingent and direct fiscal risk for the state.
ECG sits at the centre of that exposure. The electricity distributor alone accounted for GH¢71bn of total SOE liabilities in 2024, equivalent to roughly 6.00% of GDP, making it the largest single contributor to the portfolio’s liability stock.
The scale of ECG’s balance sheet means reform of the wider SOE sector cannot be divorced from the economics of electricity distribution, tariffs, collections, power-purchase obligations and government policy.
Financing costs are compounding the weakness. “Aggregate financing costs reached GH¢9.4 billion in 2024 – nearly six times the Earnings before Interest and Tax of GH¢1.57 billion,” the IMF said. It added that the bulk of those costs were concentrated among Ghana Water Company, COCOBOD and energy-sector SOEs, reinforcing the case for prioritising reforms around the institutions creating the largest fiscal drag.
That ratio changes the diagnosis of the problem. If finance costs are almost six times operating earnings before interest and tax, an SOE can improve revenue or operational efficiency and still remain financially distressed because debt servicing consumes the gains.
The policy challenge is therefore not simply poor management but the interaction between accumulated liabilities, interest costs, foreign-currency exposure and weak commercial structures.
The IMF identifies “Tariffs Below Cost Recovery, Unidentified and Uncosted Quasi-Fiscal Activities and Market Factors Affecting Performance” among the structural problems undermining large SOEs. This is particularly relevant in utilities, where government may require services to be delivered at politically acceptable prices even when those prices do not cover full economic costs.
When the gap is not explicitly budgeted, it tends to reappear as arrears, borrowing or unpaid obligations elsewhere in the system.
Foreign-exchange risk deepens the vulnerability. The IMF notes that energy SOEs carry extensive obligations under power purchase agreements, many of them indexed to the US dollar and supported by government guarantees.
“These magnify the foreign-exchange and refinancing risks and link the SOEs’ balance sheets closely to the sovereign’s own debt position,” the Fund said.
That link means cedi depreciation can quickly become a public-finance problem. A weaker currency increases the domestic-currency value of dollar-linked obligations, while higher global financing costs make refinancing more expensive and can further weaken already stressed balance sheets. Once an SOE becomes unable to service those obligations, the state may ultimately be forced to intervene, converting corporate liabilities into sovereign exposure.
The sector is too large to be treated as peripheral to fiscal policy. SOEs reporting to the State Interests and Governance Authority generated GH¢133.7bn in revenue in 2024, equivalent to 11.50% of GDP, while their assets totalled about GH¢395bn, or 34.00% of GDP.
These companies therefore control a substantial share of national economic infrastructure and cannot simply be allowed to fail without potentially severe consequences.
The concentration of losses nevertheless gives government a possible route to reform. The ten entities identified include ECG, Volta River Authority, GNPC, COCOBOD, Bui Power Authority, Ghana Gas, NEDCo, Ghana Ports and Harbours Authority, Consolidated Bank Ghana and GRIDCo.
Because the IMF says “loss-making is heavily concentrated”, the largest fiscal returns may come from targeted restructuring of a relatively small group rather than applying the same intervention across the entire SOE portfolio.
That approach would still be politically difficult because many SOEs exist to perform strategic or social functions that private companies may not provide on identical terms. Electricity, water, cocoa, ports and petroleum are not ordinary commercial businesses; each is also an instrument of public policy. The challenge is therefore to distinguish commercial inefficiency from deliberate social obligations and to make the cost of those obligations transparent.
A policy of simply refusing to support loss-making SOEs could therefore create service disruptions rather than efficiency. The more sustainable approach would combine stronger performance contracts, professional management, tighter borrowing controls, realistic pricing where possible, better revenue collection and clear separation between commercial activities and government-mandated social programmes.
If government requires an SOE to provide a service below cost, the document argues that the subsidy should be explicitly identified and budgeted rather than quietly buried in the company’s balance sheet.
The IMF also cautions against treating the entire state-enterprise sector as uniformly dysfunctional. It points to “positive pockets of performance that show what is possible when commercial discipline and supportive sector policy are aligned”, while warning that portfolio averages conceal sharp differences across subsectors.
Strong performers, however, cannot indefinitely offset losses generated by a small number of highly leveraged entities.
For investors and lenders, the implications extend beyond corporate governance. Ghana’s fiscal health cannot be assessed solely through central-government debt and deficit numbers because SOE liabilities increasingly form part of the country’s effective public-sector balance sheet.
The GH¢282bn liability stock therefore represents potential future claims on state resources, while annual losses show that the problem can continue to generate fresh debt and arrears if left unresolved.
The danger is a circular debt dynamic: operating losses require borrowing, borrowing raises finance costs, higher finance costs deepen losses and deeper losses eventually increase demands for government support.
Breaking that cycle may prove one of the hardest parts of Ghana’s fiscal reset because it requires structural reform inside politically important institutions rather than only changes to taxes or central-government expenditure.
The IMF’s analysis suggests that the dividing line between the sovereign balance sheet and the balance sheets of the companies it owns is becoming increasingly difficult to maintain.
For Ghana, the decisive fiscal reforms may therefore happen outside the Ministry of Finance’s traditional budget tables.
With GH¢282bn in SOE liabilities, GH¢71bn concentrated at ECG and GH¢8.8bn in losses among ten major entities, stabilising public finances will depend partly on whether government can stop state enterprises from converting operational and financial weakness into recurring claims on taxpayers.
As the document concludes, the real fiscal reset may begin “inside the balance sheets of the companies the state owns.”
