The International Monetary Fund (IMF) has warned the Mahama government that its recent fuel subsidy could damage Ghana’s fiscal gains.
According to the IMF, the recent fuel subsidy measures must remain temporary and carefully targeted not to undermine Ghana’s fiscal gains.
The IMF warning was contained in its Staff Report submitted to the Fund’s Executive Board on July 27 ahead of Ghana’s Sixth Review under the Extended Credit Facility (ECF) programme.
The IMF Staff Report acknowledged Ghana’s improving macroeconomic outlook but warned that fuel subsidies should not become a permanent policy tool.
Parts of the report stated, “The recent fuel subsidy measures must be temporary and well targeted.”
“Ghana’s near-term growth and inflation outlook is favourable but subject to elevated downside risks.”
It also identified external threats including “commodity price volatility, geopolitical tensions (including from the war in the Middle East), and trade disruptions.”
On the domestic front, the IMF warned that “policy slippages, delays in the implementation of SOE reforms (including state-owned banks), and failure to safeguard the central bank’s balance sheet could undermine confidence.”
It further observed that “Several state-owned enterprises (SOEs) continue to pose large fiscal risks”.
Also, Ghana’s Ministry of Energy has disclosed that the GH¢2 subsidy on every litre of diesel for August will cost the government about GH¢500 million.
IMF remarks follow President John Dramani Mahama, who directed a GH¢2.00 per litre reduction in the regulatory margin on diesel to cushion consumers against surging fuel pump prices, effective Tuesday, August 4, 2026.
The directive was announced Monday by the Presidency Communications Office and signed by Minister Felix Kwakye Ofosu and will last for a month before it will be reviewed.
The move forms part of the government’s aims to cushion consumers, hold back planned transport fare hikes, curb inflation, and soften the blow from higher global fuel costs.
The statement issued by the presidency read, “His Excellency the President has directed that, in line with the decision of Cabinet and the successful intervention implemented in April 2026, the regulatory margin on diesel be reduced by GHS 2.00 per litre for one (1) month.
This temporary intervention is intended to cushion consumers, prevent transport fare hikes, contain inflationary pressures, and mitigate the pass-through effect of higher fuel prices on the cost of living.
This directive shall take effect from Tuesday, 4 August 2026, and shall remain in force for one month, unless otherwise reviewed by Government.
The Government will continue to monitor developments in the international energy market closely and take additional policy measures, where necessary, to protect the interests of the Ghanaian people and sustain economic recovery”.
Meanwhile, Dennis Miracles Aboagye, an aide to the New Patriotic Party (NPP) flagbearer Dr Mahamudu Bawumia, has claimed that the Mahama government’s GH¢2 reduction in diesel prices has not provided meaningful relief to Ghanaians.
The NPP man argued that although the government has introduced the reduction, the overall price of fuel at the pumps remains higher than what Ghanaians were paying previously.
According to Miracles Aboagye, even after the reduction, fuel prices remain a major contributor to the high cost of living.
Miracles Aboagye urged the Mahama government to measure it against the promises it made to Ghanaians, particularly the commitment to reduce the cost of living, adding that the government must focus on delivering tangible relief to citizens.
Speaking on Eyewitness News, Miracles Aboagye stated, “The question is not about how much he is removing. It is what impact the two cedis is making in the global picture”.
“As we speak, even with the removal of the two cedis, fuel prices are still more expensive than they met it,” Mr Aboagye stated.
He added, “The promise was a sacred one to the people of this country. He said he was going to make it cheaper, make it less expensive for the Ghanaian people”.
“The Ghanaian people are talking about the fact that the NDC came to meet a litre of fuel at the pumps at a certain price and today, even with the two cedis removed, it is more expensive than they met it,” he added.
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