Ghana moves to enact new Loans Act to enforce fiscal discipline

The government is preparing to introduce a new Loans Act aimed at tightening controls on public borrowing and ensuring that all contracted debt delivers measurable value to the economy.

Finance Minister Dr Cassiel Ato Forson announced the policy direction following the signing of Ghana’s 11th bilateral debt restructuring agreement with EXIM India, describing the move as part of a broader reset of the country’s debt management strategy.

According to the Minister, the proposed legislation will clearly define the permissible uses of borrowed funds, requiring that every loan be tied to high-impact, value-for-money investments.

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The law is expected to eliminate non-essential borrowing and strengthen fiscal discipline in government financing decisions.

The initiative forms part of efforts to consolidate gains from Ghana’s ongoing debt restructuring programme and restore long-term sustainability. Authorities say the country is gradually transitioning toward a low risk of debt distress, supported by improving macroeconomic indicators and a consistent track record of meeting restructured debt obligations.

The Minister emphasised that the new legal framework will anchor a fundamental shift in borrowing practices, ensuring that Ghana does not return to unsustainable debt accumulation.

He noted that future financing decisions will be guided by a simple principle: any debt incurred must deliver tangible economic and social benefits to citizens.

The proposed Loans Act is expected to complement broader public financial management reforms aimed at strengthening accountability, improving investment efficiency, and safeguarding the country’s fiscal stability.