Electricity Losses Results in Significant Fiscal Pressures

The Ministry of Finance has revealed in their recently published Annual Economic Bulletin for the Financial Year 2024, that losses in electricity distribution results in fiscal pressures.
“The electricity distribution company continues to make losses, resulting in significant fiscal pressures,” the Annual Economic Bulletin stated.
The report noted that the economy recorded a 4.4 percent growth in 2024 as a result of improvements in the informal sector such as increased access to finance via Mobile Money, increased access to Technical, Vocational, and Employment Training (TVET), value added in agriculture, mining revenue, and trade expansion.
But that compared to 2023, it represents a slowdown in growth by 1.3 percentage points from 5.7 percent recorded in 2023 and attributed the decline in growth to the falling global iron ore price from US$143.20 per Metric Ton (MT) to US$109.44 per Metric Ton (MT), trade risk and uncertainty, commodity price shocks, and high debt service payments that crowded the fiscal space for productive spending.
The report furthered that following the rebasing of the National Account in 2024, the size of the economy grew by 56.4 percent in 2023 from US$4.2 billion to US$8 billion in 2024 and the structure of the economy shifted from Agriculture sector dominance to Services sector.
The report maintained that debt remains at high risk of distress but sustainable on a forward-looking basis, international reserves have fallen to less than three months of imports, borrowing costs remain high but at a decreasing rate and the electricity distribution company continues to make losses, resulting in significant fiscal pressures.
The publication of the 2024 Annual Economic Bulletin is in line with Government’s continued
commitment to enhance transparency and accountability in economic and fiscal management, the report emphasized.