Ghana Seeks a New US Grant Deal After Debt Default Froze Its Eligibility
Ghana · ECONOMY
Key Facts
- —The country Ghana is a West African democracy of about 35 million people, roughly half the UK’s population. Its economy was worth about US$114 billion in 2025, according to the World Bank.
- —Why it matters The Millennium Challenge Corporation (MCC) is a US government agency that gives large grants, called compacts, to poorer countries. Ghana has completed two, worth about US$863 million combined.
- —Why now Ghana was barred from MCC aid for the 2026 US fiscal year because of its debt default. It is back on the candidate list for fiscal 2027.
- —What happened Officials from MiDA, the Ghanaian agency that ran both compacts, met MCC leaders in New York, Joy Business reported on 27 September.
- —The numbers The 2014 Power Compact was signed at US$498.2 million. MCC cancelled US$190 million in 2019 after Ghana ended a private power-distribution concession.
- —What it means for you A new compact would probably target electricity, a daily cost for any business in Ghana. MCC now also weighs openings for US investment and exports.
- —Still open No new compact has been offered. MCC’s board will choose new partners on the evidence, and Ghana must show its power reforms have held.
Ghana wants back into the Millennium Challenge Corporation (MCC), a US aid agency that funded two big Ghanaian programmes. The talks open the way to a possible third Ghana MCC compact, after a debt default shut the door last year.
The MCC gave Ghana about US$863 million in grants between 2006 and 2022. Its Ghanaian partner, the Millennium Development Authority (MiDA), has now met MCC officials in New York to discuss a new chapter.
Who MCC and MiDA are
MCC was set up by the US Congress in 2004 to fund growth projects in poorer countries that meet governance tests. Its grants do not have to be repaid.
MiDA, the Millennium Development Authority, was created by Ghana’s parliament to manage MCC money and similar programmes. It has run both of Ghana’s compacts since 2006.
Two compacts, one rupture
Ghana’s first compact, signed in August 2006, provided US$547 million for farming, roads and rural services. It ran until 2012.
According to Graphic Online, it rebuilt over 350 kilometres of roads and trained about 67,000 farmers. It also built 250 school blocks across the country.
The second, the Power Compact, was signed in August 2014 at US$498.2 million. It entered into force in September 2016 and aimed to make electricity more reliable and affordable.
Its centrepiece was a private concession to run the Electricity Company of Ghana (ECG), the state power distributor. A firm called Power Distribution Services (PDS) took over in 2019.
Ghana ended the PDS concession later in 2019. MCC then cancelled the US$190 million that depended on it, cutting the compact to about US$316 million.
The rest was delivered through MiDA, and MCC and Ghana formally completed the Power Compact on 6 June 2022. It built the Pokuase and Kasoa bulk supply points around Accra and two substations.
How the debt default shut the door
Ghana stopped paying most of its foreign debt in December 2022. It later restructured it with creditors under an International Monetary Fund (IMF) programme.
That default had a price in Washington. MCC’s candidate report for fiscal 2026, released in August 2025, listed Ghana as ineligible for US foreign assistance.
The bar came from section 7012 of the US foreign aid budget law, which blocks aid to countries in debt arrears. Graphic Online reported that Ghana otherwise met the income test.
MCC’s candidate report for fiscal 2027 now lists Ghana among the candidate countries again. Being a candidate is only the first step towards a compact.
What was said in New York
The MiDA team was led by chief executive Alex Mould and board chairman Charles Abugre, according to Joy Business. MCC sent Jason Small, its acting vice-president for compact operations.
Mr Small said Ghana’s record with MCC would weigh heavily if the country sought another compact. “There’s still an opportunity,” he said, while stressing that more analysis was needed.
He said MCC now weighs what he called “American returns”. These include openings for US investment, US exports and supply chains for critical minerals.
For former partners, MCC also checks whether past projects were finished and whether reforms lasted. That gives Ghana a chance to show what changed after the PDS episode.
Mr Mould pointed to energy as the natural starting point, including grid upgrades and better-run distribution companies. He also raised a regional gas pipeline with Nigeria to feed power plants.
He cited reforms made since the compact, such as quarterly automatic power tariff adjustments. Mr Small recalled earlier MCC studies of power links to Côte d’Ivoire and Burkina Faso.
MCC’s new focus on minerals fits a wider contest among outside powers for influence in Africa. That rivalry is explored in Africa: The New Scramble.
MiDA’s wider role at home
President John Dramani Mahama, in office since January 2025, has widened MiDA’s job beyond MCC work. In September 2025 he made it Ghana’s coordinator for grants and philanthropic funding.
MiDA also says it is applying MCC-style methods to Grow24, the government’s farm investment drive. Grow24 sits within Mr Mahama’s 24-Hour Economy plan to keep businesses running around the clock.
On 22 September 2026, Mr Mahama called MiDA Ghana’s gateway to global philanthropy. The MCC talks give the agency a chance to show it can still win large foreign grants.
What to watch next
The first test is MCC’s annual scorecards and board selection for fiscal 2027. Only countries the board selects can start developing a compact.
If Ghana is chosen, MCC would first study which constraint most holds back growth. Mr Small said energy could well remain that constraint.
For investors and residents, the practical question is power. A new Ghana MCC compact aimed at the grid could mean fewer outages and a more reliable supply for business.
Frequently Asked Questions
What is the Millennium Challenge Corporation?
It is a US government agency, created in 2004, that gives large grants called compacts to poorer countries that meet governance tests. Ghana completed two compacts worth about US$863 million combined.
Why was Ghana barred from MCC aid?
Ghana defaulted on most of its foreign debt in December 2022. US law blocks aid to countries in debt arrears, so MCC listed Ghana as ineligible for fiscal 2026.
Is a new Ghana MCC compact agreed?
No. Ghana is back on the candidate list for fiscal 2027 and MiDA has held talks with MCC. The MCC board has not selected Ghana for a new compact.
Why did MCC cancel US$190 million in 2019?
The money depended on a private concession to run the Electricity Company of Ghana. When Ghana ended that deal with Power Distribution Services in 2019, MCC cancelled the linked funds.
Connected Coverage
Sources
- Joy Business (MyJoyOnline), 27 September 2026
- MCC, Candidate Country Report for Fiscal Year 2027
- Graphic Online, Ghana excluded from MCC list for 2026
- MiDA news releases
- MiDA, Grow24 and MCC models
- World Bank, Ghana data
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error
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