Conduct performance audit of all state agencies to address governance inefficiencies, public debt – ACEP

April 6, 2023

The Africa Centre for Energy Policy () has urged Ghana government to conduct a performance audit of all state agencies to establish optimal numbers of staff and administrative budgets for their operations.

In a paper titled “Breaking the cycle of support: Addressing governance inefficiencies and drivers of public debt in Ghana,” ACEP said that addressing the country's public debt requires more than just IMF programs. Government must establish mechanisms to assess the effectiveness of expenditure and the capacity of projects to deliver value that facilitates loan repayments.

According to ACEP, Ghana's public debt is caused by governance inefficiencies, weak procurement practices, poor contingency planning, excessive spending over revenues, inadequate state institutions, and insufficient loan monitoring mechanisms. The think tank suggested that long-term solutions must be implemented to address these issues and avoid a recurring cycle of seeking IMF support.

The energy think tank also called for a national dialogue on the most effective procurement system that aligns with the Ghanaian context and delivers value to citizens. ACEP stressed the need for Ghana to align its expenditures with its revenue to reduce deficit spending. Merely relying on GDP as a benchmark is insufficient, particularly when the disparity between expenditure and revenue is widening from 21% in 2018 to 52% in 2021.

ACEP urged the private sector to participate in the power sector with effective regulation by the state to ensure the delivery of value. The think tank also proposed tier-two pension investments as an option to mobilize domestic revenue for power sector investments. It is unacceptable for the government to spend billions of dollars to meet payment obligations resulting from poor management and procurement-driven investments.

ACEP also called for the government to enforce laws transparently to encourage investments and assure investors of fair treatment in the energy and extractive sectors. The think tank also emphasized the need for active citizenship and frequent conversations on how governance addresses the country's fiscal challenges.

This requires the participation of the private sector, media, and Civil Society on the broad governance challenges that could lead to debt unsustainability.

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