Government reform efforts yet to translate into improved SOEs financial performance – IMF

The International Monetary Fund has stated that the significant reform efforts by the government over the past decade have not yet translated into improved State-Owned Enterprises (SOEs) financial performance, pointing to persistent structural weaknesses. According to the Fund, the energy and commodity-sector SOEs remain the principal sources of financial strain, with arrears accumulation, liquidity constraints, and non-cost reflective tariffs contributing to ongoing fiscal pressures. In its Technical Assistance Report on Ghana titled “Advancing SOE Fiscal Risks Management, Financial Oversight, Governance and Investment Implementation”, the Bretton Woods institution said while SOE revenues increased markedly in absolute terms – from GH¢19 billion (2015) to GH¢133 billion (2024) – this has not resulted in improved overall SOE performance.

“Despite many entities operating profitably or around break-even point, a few large SOEs continue to drive the portfolio into net losses, which fluctuated around 1. 0% of GDP [Gross Domestic Product] between 2016 and 2024. Part of this is due to financing costs of foreign currency denominated debts”. It explained that this trend highlights a disconnect between reform progress and lack of tangible performance gains, as underlying constraints from quasi-fiscal activities and weak enforcement of hard budget constraints, remain largely unaddressed. It welcomed the increased financial oversight role and the strengthened fiscal risk assessments of the Ministry of Finance [MOF]. At the same time, it said challenges remain with timeliness, data completeness, and integration of the fiscal risks assessment processes. The MOF has two parallel fiscal risks reports – the Fiscal Risk Statement (FRS) and the SOE Fiscal Risk Report, which provide…