Government Passes Landmark Public Financial Management Act to Strengthen Fiscal Discipline

Government Enacts Groundbreaking Public Financial Management Act to Strengthen Fiscal Discipline

The Ministry of Finance has officially announced the passage of the Public Financial Management (Amendment) Act, 2025, a groundbreaking piece of legislation aimed at reinforcing fiscal discipline, improving accountability, and ensuring sustainable economic stability in Ghana.

This extensive reform brings in new measures that enhance oversight, enforce strict fiscal responsibility guidelines, and establish an independent Fiscal Council to promote transparency and compliance across the government’s financial management systems.

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

Tougher Penalties for Fiscal Mismanagement:
- The Minister of Finance will now face censure under Article 82 of the Constitution for any violations of fiscal responsibility rules.
- Government ministers and heads of covered entities could face imprisonment if their actions contribute to fiscal mismanagement or violations of financial regulations.
New Fiscal Responsibility Framework:
- A primary balance rule has been implemented, requiring an annual surplus of at least 1.5% of GDP on a commitment basis to ensure fiscal sustainability.
- A cap on public debt has also been introduced, with the debt-to-GDP ratio set to be capped at 45% by 2034, ensuring the country’s debt remains manageable.
Creation of an Independent Fiscal Council:
- The Act establishes a legislated, autonomous Fiscal Council that will be tasked with monitoring the adherence to fiscal rules, overseeing budgetary credibility, and ensuring macroeconomic stability by holding the government accountable.
Stronger Oversight and Accountability Mechanisms:
- The Minister of Finance will now be required to obtain prior approval from Parliament or Cabinet before suspending fiscal rules due to unforeseen economic circumstances or force majeure events.
Consolidation of Fiscal Laws:
- All fiscal regulations and guidelines are now unified under one legal framework, streamlining enforcement and eliminating redundancies in the previous system.

As part of this reform, the earlier Fiscal Responsibility Act, 2018 (Act 982) has been repealed, and the Presidential Fiscal Advisory Council has been dissolved. These changes consolidate oversight under the newly established independent Fiscal Council, giving it enhanced authority and responsibility.

This landmark legislation comes ahead of the September 2025 deadline for the implementation of the IMF-supported program and signifies the government’s unwavering commitment to restoring fiscal discipline, increasing transparency, and securing long-term economic stability for the nation. By enacting these reforms now, the Ministry of Finance is aiming to ensure a stronger, more sustainable financial future for Ghana.

The Ministry has reaffirmed its commitment to ensuring the effective implementation of the Act, working alongside key stakeholders to maintain the country’s macroeconomic stability and boost economic growth. This forward-thinking move underscores Ghana’s dedication to sound financial governance and fiscal responsibility, setting the stage for a prosperous and resilient future.