IMF’s Ghana Rep. Describes IPPs Debt Restructuring as Crucial Reset for Energy Sector
The International Monetary Fund (IMF) has described Ghana’s renegotiation of legacy arrears owed to Independent Power Producers (IPPs) as a major turning point for the country’s energy sector, signalling renewed investor confidence and improved financial discipline.
For years, Ghana’s power sector had been burdened by more than US$2.5 billion in arrears to IPPs, a situation that strained liquidity, disrupted fuel supply, and weakened confidence across the energy value chain. The IMF says the successful restructuring of these debts in 2025 marks a crucial “reset” for the sector.
According to the IMF, the government’s move to restructure the arrears represents an opportunity to restore balance sheet health across the power ecosystem, provided reforms in transparency, efficiency, and cost recovery continue.
In an interview on Channel One TV’s Point of View, IMF Resident Representative to Ghana, Dr. Adrian Alter, hailed the government’s engagement with IPPs as “an important milestone” that resets the sector’s financial fundamentals.
“The renegotiation of the arrears, of the past arrears, which was conducted by the government this summer, is an important milestone,” Dr. Alter stated. “I would say that is a reset for the industry.”
He noted that the improvement aligns with notable operational gains at the Electricity Company of Ghana (ECG), where revenues have increased “quite substantially compared to last year,” driven by enhanced transparency, tariff adjustments, and stronger revenue collection.
Dr. Alter further highlighted the effective implementation of the cash waterfall mechanism, describing 2025 as a year marked by “payment regularity and transparency” in the energy sector.
“The IPPs are now paid more regularly, also the fuel suppliers as well, and the arrears accumulated this year are very limited, if any,” he remarked.
While acknowledging the progress achieved, the IMF representative stressed that sustaining the gains will require continued fiscal prudence and cost control measures. He added that maintaining payment discipline and preventing a relapse into arrears will be key to safeguarding Ghana’s energy security and ensuring long-term financial sustainability.
Ghana set to Save $300m in Debt Restructuring Deal with IPPs
According to Ben Boakye, a member of the government’s negotiating team, the Government of Ghana is on course to save about $300 million following the debt restructuring agreement with Independent Power Producers (IPPs), a move expected to ease pressure on the energy sector and the public purse.
The arrangement reduces Ghana’s outstanding debt to IPPs by 20 percent, trimming the figure from $1.5 billion to $1.2 billion.
“It’s work in progress and we appreciate the government’s effort to engage multiple stakeholders to find solutions to the problems of the energy sector and clean up the sector in general,” Mr Boakye said at the Future of Energy Conference (FEC) organised by the Africa Centre for Energy Policy (ACEP) in Accra on August 26, 2025.
“I must say that the IPPs have been very magnanimous to give us a haircut. We are looking to save about $300 million on the debt and also over a billion dollars on future payments. At this point, we are close to $200 million,” he added.
Mr Boakye further explained that the restructuring will likely extend Ghana’s repayment timeline to between four and five years, providing the government with the much-needed fiscal space.
