June 03, 2023

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Energy Sector Debt Hampering Public Finance Management – UN

The United Nations Mission in Ghana has highlighted Ghana’s enduring energy sector debt as a challenge to public finance management.

The Mission acknowledged in its 2016 Annual Development Assistance Framework (UNDAF) report, that the Energy Sector Levy has helped restructure debt obligations to domestic banks, and improved electricity reliability substantially.

It however raised concerns about the sector’s growing debt.

The energy sector debt is estimated at some $2.4 billion, which translates to over 6% of the GDP at year ending 2016.

Government is currently inviting investors to participate in a GH¢ 10 billion energy sector bond aimed at defraying the debt.

It is also considering issuing its energy bond in batches of two or three, with the first issue to raise GHc 6 billion, and the subsequent one to rise the remaining as the case may be.

It has emerged that; the government may not be paying anything less than 17 percent in interest for the energy bond.

Lead managers of the bond told Citi Business News the target is also largely due to developments and investor appetite so far.

The GHc 6 billion cedi bond is being auctioned in two bids; a 7-year bid to raise 2.4 billion cedis, while the 10-year bid is expected to raise 3.6 billion cedis.

But the Ghana UNDAF report cautions that, the sector’s financial arrears pose persistent challenges to the country’s public finance management.

The UNDAF is a strategic, medium-term results framework that describes the collective vision and response of the UN system to national development priorities and results on the basis of normative programming principles.

It describes how UN Country Teams will contribute to the achievement of development results based on a common country analysis and UN comparative advantage.

The 2017 UNDAF guidance will support UN Country Teams to produce a new generation of UNDAFs that reflect the 2030 Agenda for Sustainable Development, with sustainable development goals at their core, and position them to provide quality support to member states in their aspiration to achieve the 2030 Agenda.


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