Minister of Finance, Dr Cassiel Ato Forson
Minister of Finance, Dr. Cassiel Ato Forson, has announced that under the amended Public Financial Management (PFM) Act, 2025, any finance minister who violates fiscal rules will face censure.
Furthermore, ministers and heads of covered state entities could face imprisonment if found responsible for fiscal slippages.
According to the Finance Ministry, these measures are part of broader reforms aimed at ensuring strict adherence to fiscal discipline and promoting sustainable economic management.
Key fiscal reforms
The PFM Act, 2025 introduces two major fiscal rules to strengthen financial governance:
1. Non-interest spending must be less than revenue
• The government must ensure that non-interest expenditure does not exceed revenue.
• At least 1.5% of GDP must remain as extra revenue after covering all expenditures, excluding interest payments.
• This ensures that even after settling operational expenses, a fiscal surplus remains to support economic stability.
2. Debt limit to prevent unsustainable borrowing
• A cap will be placed on the country’s total debt accumulation.
• By 2034, Ghana’s total debt must not exceed 45% of GDP to maintain financial stability.
This restriction aims to prevent excessive borrowing and ensure the country remains capable of servicing its debt without placing undue pressure on public finances.
Additionally, the Minister of Finance must obtain Parliamentary or Cabinet approval before suspending fiscal rules in the event of force majeure or economic shocks.
These reforms represent a significant step toward fiscal consolidation and are expected to bolster investor confidence while ensuring long-term economic sustainability.
The Public Financial Management (PFM) Act is a law enacted to regulate financial management in the public sector within a macroeconomic and fiscal framework. It defines the responsibilities of stakeholders, and provides for the accounting and auditing of public funds, as well as related matters.
SP/MA
Watch the latest edition of BizTech below:
Click here to follow the GhanaWeb Business WhatsApp channel