The International Monetary Fund (IMF) has endorsed the introduction of a GH¢1 per litre levy on refined petroleum products, effective June 16, 2025. The levy, part of the amended Energy Sector Shortfall and Debt Repayment Levy, aims to generate critical revenue to address the growing debt crisis in Ghana’s energy sector.
Ghana currently records a GH¢2 billion monthly deficit in the energy sector, with the government grappling with US$3.7 billion in sector-wide debt, including over US$1.7 billion owed to Independent Power Producers (IPPs). The heavy reliance on thermal power generation and over US$1.1 billion spent annually on liquid fuel purchases have further strained the system, exacerbated by the fact that fuel costs are not included in electricity tariffs.
IMF Director of Communications, Julie Kozack, affirmed that the fuel levy would support Ghana’s ability to meet its fiscal targets under the ongoing bailout program. “This is a new measure that will help generate additional resources to tackle the challenges in Ghana’s energy sector and bolster Ghana’s ability to deliver on the fiscal objectives under the program.”
She also acknowledged the cedi’s recent appreciation, indicating that it could influence future program adjustments. “Future program reviews will provide an opportunity for the team to carefully assess all evolving macroeconomic and financial conditions, including exchange rate movements, to ensure that the program’s targets and objectives remain appropriate and achievable.”
Ghana is set to receive a US$370 million disbursement in early July 2025, pending approval by the IMF Executive Board, marking the fourth disbursement under the Extended Credit Facility (ECF) program and raising total IMF support to US$2.4 billion since May 2023.
BRIEF:
However, the Minority in Parliament has vehemently opposed the GH¢1 fuel levy, describing it as an additional burden on Ghanaians. According to the Minority Leader, the levy will further exacerbate the economic hardships faced by citizens, particularly commuters and drivers.
Former President John Mahama, flagbearer of the National Democratic Congress (NDC), has also expressed strong reservations about the levy. He argues that the levy will worsen the cost of living for ordinary Ghanaians and undermine the government’s efforts to stabilize the economy.
The NDC MPs have vowed to closely monitor the implementation of the levy and its impact on the economy and citizens’ welfare. They have also called for a review of the levy, arguing that it will not solve the structural problems in the energy sector.
The Minority’s opposition to the levy has sparked a heated debate in Parliament, with the Majority side insisting that the levy is necessary to address the energy sector’s challenges. However, the NDC MPs remain resolute in their opposition, citing concerns about the levy’s potential impact on consumers.
The debate surrounding the fuel levy highlights the complexities of balancing economic reforms with social welfare considerations. As the implementation of the levy begins, it remains to be seen how the government will address the concerns raised by the Minority and ensure that the measure achieves its intended objectives without unduly burdening citizens.
