By Joshua Worlasi AMLANU

The nation’s financial revival faces threats due to increasing liabilities within the energy and cocoa industries, as the World Bank has cautioned that the government-owned electricity provider’s deficit might grow to $9 billion by 2026 if necessary changes are not implemented.

According to the most recent Ghana Economic Update from the Washington-headquartered institution, state-run companies continue to be a significant cause of potential financial obligations that might affect the country’s budget. The report highlighted the Electricity Company of Ghana (ECG) and the cocoa industry as the primary concerns.

“Urgently tackling these financial risks is essential to prevent undoing the progress made in macroeconomic stability,” stated Robert Taliercio, the Bank’s Country Director for Ghana, Sierra Leone, and Liberia. He warned that debt restructuring and fiscal adjustment initiatives might face setbacks if state-owned enterprise debts continue to accumulate.

The bank estimates that ECG’s total cash deficit might climb to $9 billion over the next two years if tariff discrepancies, outstanding payments, and operational problems aren’t addressed. The company has consistently faced challenges such as technical and commercial losses, poor collection rates, and expensive power procurement contracts.

The chocolate production sector, controlled by the Ghana Cocoa Board (Cocobod), faces challenges due to fluctuating international pricing, environmental changes, and accumulated debts from long-term pre-export funding. As of mid-2024, Cocobod’s obligations surpassed $3 billion, with most of this amount coming due within the next three years.

Energy and chocolate are key industries, but their financial stability is declining,” Taliercio stated. “Without reform, they will keep burdening the budget and the economy.

The bank called for faster state-owned enterprise reforms, improved corporate management practices, and tariff structures that reflect actual costs within the electricity industry. It also suggested increasing local cocoa processing activities and decreasing dependence on group loans in the cocoa business.

The Ministry of Finance has recognized financial dangers — mentioning energy sector payment gaps amounting to GH¢11.4 billion (0.8% of GDP) in the most recent budget, which is 12.7% less than planned. Steps proposed involve changing tariffs, revising agreements with independent power producers, enhancing collection efforts, and increasing local gas usage to reduce expensive imports.

Current reforms at ECG involve revising agreements, upgrading technological infrastructure, and deploying one million intelligent meters to reduce inefficiencies. Cocobod is focusing on increasing domestic production capacity and enhancing output via agricultural recovery initiatives. In June 2025, Parliament revised the ESLA Act, increasing taxes on oil-related goods to support payment of energy debts and ensure consistent fuel availability.

The government has committed to expanding state-owned enterprise (SOE) governance reforms, which involve incorporating private sector involvement in power distribution. This year, a steering committee will select a transaction adviser to test a multi-lease approach for ECG, as a PPA Review Committee focuses on reducing contractual expenses.

The World Bank emphasized that clear financial disclosure, routine stress tests, and enhanced supervision from the State Interests and Governance Authority are essential for avoiding situations where state-owned enterprise debts strain government budgets. By comparing with other African nations, it cautioned that uncontrolled SOE borrowing has historically led to abrupt budgetary emergencies.

The financial situation in Ghana has shown improvement due to more controlled expenditures, fresh income strategies, and outside assistance; however, the Bank warned that these advancements are still vulnerable.

The SOE liabilities represent a time-bomb,” the report stated. “Addressing them will be essential for maintaining the nation’s economic revival.

Supplied by SyndiGate Media Inc. (
Syndigate.info
).