Finance Ministers to Face Censure for Breaching Fiscal Rules Under Amended PFM Act

Finance Ministers to Face Censure for Breaching Fiscal Rules Under Amended PFM Act

Ghana’s Minister for Finance, Dr. Cassiel Ato Forson, has disclosed 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 form 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 except interest payments.

• This ensures that, even after settling operational expenses, there is still a fiscal surplus to strengthen economic stability.

2. Debt Limit to Prevent Unsustainable Borrowing

• A cap is being 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 obligations without undue pressure on public finances.

Additionally, the Finance Minister is required to obtain Parliamentary or Cabinet approval before suspending fiscal rules due to force majeure events or economic shocks.

These reforms mark a significant step towards fiscal consolidation and are expected to bolster investor confidence while ensuring long-term economic sustainability.