Ministry of Finance Passes Public Financial Management Amendment Act, 2025

Apr 6, 2025 - 20:48

Dr. Cassiel Ato Forson is Ghana's Finance Minister

Accra, Ghana - 06 April, 2025 - Ghana's Ministry of Finance has announced the passage of the Public Financial Management (Amendment) Act, 2025, a landmark legislation aimed at bolstering fiscal discipline, accountability, and ensuring long-term economic stability in Ghana.

This comprehensive reform introduces stricter oversight mechanisms, enforces rigorous fiscal responsibility rules, and establishes an independent Fiscal Council to enhance transparency and compliance.

The new law introduces enhanced sanctions for fiscal mismanagement, including censure of the Minister of Finance under Article 82 of the Constitution and potential imprisonment for Ministers of State and Heads of Covered Entities who contribute to fiscal slippages.

Additionally, the law implements new fiscal responsibility measures, such as a primary balance rule requiring an annual surplus of at least 1.5% of GDP and a public debt ceiling capping the debt-to-GDP ratio at 45% by 2034.

A key feature of the reform is the creation of an independent Fiscal Council, which will monitor adherence to fiscal responsibility rules and ensure budget credibility and macroeconomic stability. The law also strengthens oversight and accountability by requiring the Minister of Finance to obtain Parliamentary or Cabinet approval before suspending fiscal rules due to force majeure or unforeseen economic conditions.

The enactment of this law repeals the Fiscal Responsibility Act, 2018 (Act 982) and dissolves the Presidential Fiscal Advisory Council, streamlining oversight under the newly established independent Fiscal Council.

The Ministry of Finance has expressed its commitment to ensuring full implementation of these laws and collaborating with stakeholders to uphold Ghana's macroeconomic stability and prosperity.

The reforms are expected to have a positive impact on Ghana's economic prospects, and the Ministry of Finance will work closely with all stakeholders to ensure successful implementation.

Key Reforms Introduced by the PFM (Amendment) Act, 2025

- Enhanced Sanctions for Fiscal Mismanagement: The Minister of Finance faces censure under Article 82 of the Constitution for any breaches of fiscal rules, while Ministers of State and Heads of Covered Entities may face imprisonment for actions contributing to fiscal slippages.
- New Fiscal Responsibility Measures: A primary balance rule mandates an annual surplus of at least 1.5% of GDP on a commitment basis, and a public debt ceiling caps the debt-to-GDP ratio at 45% by 2034 to ensure debt sustainability.
- Creation of an Independent Fiscal Council: A legislated, autonomous Fiscal Council will monitor adherence to fiscal responsibility rules, ensuring budget credibility and macroeconomic stability.
- Strengthened Oversight and Accountability: The Minister of Finance must obtain Parliamentary or Cabinet approval before suspending fiscal rules due to force majeure or unforeseen economic conditions.
- Consolidation of Fiscal Management Laws: All fiscal rules are unified under a single legal framework, eliminating redundancies and enhancing enforcement mechanisms.

Source: Lead News Online