Last week, Ghana’s Ministry of Finance announced it had cleared $1.47 billion in legacy energy sector debt, a significant step towards stabilizing the power sector and restoring fiscal credibility.

This cleanup will help the country reduce its debt stress and allow the power sector a second chance. The big question is how Ghana avoids ending up here again.

First, the cost of secrecy is painfully high

Ghana’s energy debt did not appear overnight. It accumulated over many years through opaque, bilaterally negotiated, non-competitive power purchase agreements (PPAs) that included undisclosed guarantees. Citizens, investors, and even parts of Ghana’s own government had little visibility into the scale of obligations. At its peak in 2025, total sector debt reached $3 billion. This included liabilities that were not systematically tracked or disclosed, contributing to fiscal strain and undermining investor confidence.

Transparency can help prevent recurrence

Disclosure on its own does not guarantee good outcomes, but it makes bad decisions hard to hide and cheaper to correct. Building up hidden liabilities is simply harder when information is public. Publishing contracts, guarantees, and payment schedules reduces information asymmetry and enables earlier intervention by regulators, ministries of finance, and oversight institutions.

Ghana has made impressive progress

Ghana’s regulator created a public PPA register in 2023. In 2025, parliament passed broader legal reforms mandating competitive power procurement and greater transparency. These create a solid foundation for tracking obligations in real time rather than discovering them after a crisis.

But the next steps are decisive

The debt clearance follows painful reforms under an IMF debt restructuring program, which underscored how energy sector liabilities can spill into sovereign debt distress. Clearing arrears restores confidence for now. But sustainability depends on institutionalizing transparency and ensuring well-procured contracts. That means full and timely disclosure of power contracts, standardizing reporting of guarantees, and public monitoring of payment performance.

Ghana’s experience reinforces a broader lesson for power sectors across developing economies: when large public obligations remain hidden, the eventual bill is higher and harder to manage. Transparency cannot eliminate risk completely, but it could help make crises less likely, less severe, and ultimately easier to fix.