Deloitte Ghana has cautioned that the country’s energy sector continues to pose one of the biggest fiscal risks to the economy, warning that delays in implementing reforms could undermine recent gains in macroeconomic stability and debt sustainability.
In its assessment of the 2026 Mid-Year Budget Review, the professional services firm acknowledged the government’s progress in restoring economic stability but stressed that the financial health of the Electricity Company of Ghana (ECG) and other state-owned energy institutions remains a major concern.
According to Deloitte, while the Mid-Year Budget Review rightly identifies reforms in the energy sector as a priority, the persistent financial challenges confronting the sector extend beyond electricity supply and have significant implications for Ghana’s overall fiscal position.
“Without meaningful reforms, losses within the sector could eventually migrate onto the government’s balance sheet and undermine hard-won gains in debt sustainability,” the firm warned.
It therefore urged government to pursue energy sector reforms with urgency and consistency to prevent the accumulation of additional liabilities and safeguard the country’s fiscal recovery.
Debt restructuring
Commenting on Ghana’s sovereign debt restructuring programme, Deloitte noted that although the process is nearing completion, liabilities within the energy sector—particularly those linked to state-owned enterprises—continue to pose a significant risk.
The firm welcomed the Finance Minister’s commitment to strengthening public financial management systems, enforcing stricter expenditure controls and accelerating reforms within the energy sector.
“The Minister’s emphasis on strengthening public financial management controls, enforcing stricter commitment authorisation procedures and pursuing broader energy sector reforms is therefore welcome,” Deloitte stated.
It added that stronger financial discipline across public institutions would be essential to preserving the gains achieved through the debt restructuring programme.
Domestic borrowing
Deloitte also advised government to exercise caution in its domestic borrowing strategy, warning against excessive dependence on short-term debt instruments.
While acknowledging that domestic borrowing remains an important source of government financing, the firm said overreliance on short-term debt could expose the economy to higher refinancing risks and increased interest costs.
“While domestic borrowing remains an important source of financing, the government should continue to avoid excessive reliance on short-term domestic debt, which can increase refinancing risks and interest costs,” it said.
Debt service burden eases
The firm observed that the 2026 Mid-Year Budget Review largely maintains the policy direction outlined in both the 2025 Budget and the 2026 Budget Statement, with fiscal consolidation and debt sustainability remaining at the centre of government’s economic strategy.
It noted that the combination of strong economic growth and the return of inflation to single-digit levels had become defining features of Ghana’s current macroeconomic environment.
Deloitte particularly welcomed the significant decline in debt servicing costs relative to domestic revenue, describing it as one of the strongest indicators of the country’s improving fiscal position.
According to the firm, debt service as a proportion of domestic revenue fell from 55.7 per cent in 2022 to 28.6 per cent by mid-2026, freeing up government resources for investment in critical sectors.
“This means a smaller share of government revenue is being devoted to servicing debt, thereby creating fiscal space for investments in health, education, infrastructure and other development priorities,” it noted.
Overall, Deloitte said the latest economic indicators point to an economy that has made substantial progress since the debt crisis. However, it cautioned that sustaining these gains would require continued vigilance, prudent fiscal management and sustained structural reforms, particularly in the energy sector.
Source: businesspostonline
