Ghana’s energy debt could double by 2027

Ghana’s eurobonds fell sharply recently after Finance Minister Cassiel Ato Forson warned that the country’s energy debt could double by 2027 without urgent intervention.

By the numbers

2035 dollar bonds fell 1.1% to 73.3 cents on the dollar, the lowest in a month.

2030 bonds dropped 0.9% to 77.83 cents on the dollar.

Ghana’s energy debt stood at $4.5 billion at the end of 2024 but could hit $9 billion by 2027.

Why it matters

Ghana, still recovering from its 2022 debt default, recently completed a major restructuring of its $47.5 billion public debt but faces mounting financial strain from its struggling energy sector.

What’s driving energy debt?

High losses: The state-run Electricity Company of Ghana (ECG) only accounts for 62% of the energy it buys.

Lack of competition: The power generation sector remains concentrated.

Underpriced tariffs: Electricity rates are set below production costs.

The bigger picture

The warning came at a national economic dialogue in Accra, hosted by President John Mahama, who took office in December on promises of economic reform.

Ghana is still negotiating with 60 international banks to restructure $2.7 billion in loans.

Mahama has pledged to cut spending, refine the IMF’s $3 billion program, and restore investor confidence in the world’s second-largest cocoa producer.

Source: Bloomberg