Public Financial Management Amendment Act, 2025

Act 1136 PARLIAMENT OF GHANA’' LIBRARY REPUBLIC OF GHANA The One thousand one hundred and thirty-sixth ACT OF THE PARLIAMENT OF THE REPUBLIC OF GHANA ENTITLED PUBLIC FINANCIAL MANAGEMENT (AMENDMENT) ACT, 2025 AN ACT to amend the Public Financial Management Act, 2016 (Act 921) to provide for fiscal responsibility rules, establish an independent Fiscal Council to promote budget credibility, macroeconomic stability, fiscal and debt sustainability and provide for related matters. DATE OF ASSENT: 2nd April, 2025 PASSED by Parliament and assented to by the President Section 1 of Act 921 amended 1. The Public Financial Management Act, 2016 (Act 921), referred to in this Act as the “principal enactment”, is amended by the substitution for section 1, of “Objects of this Act 1 • (1) The objects of this Act are to (a) regulate the financial management of the public sector within a macroeconomic and fiscal framework; and 2 PUBLIC FINANCIAL MANAGEMENT (AMENDMENT) ACT, 2025 ARRANGEMENT OF SECTIONS Section 1. Section 1 of Act 921 amended 2. Sections 2A to 2D inserted 3. Sections 11A to 110 inserted 4. Section 12 of Act 921 amended 5. Sections 16 to 18 of Act 921 amended 6. Section 35 of Act 921 amended 7. Section 80 of Act 921 amended 8. Section 81 of Act 921 amended 9. Sections 95A and 95B inserted 10. Section 101 of Act 921 amended 11. Section 102 of Act 921 amended 12. Section 103 of Act 921 amended 13. First Schedule inserted 14. Schedule to Act 921 amended Act 1136 Public Financial Management (Amendment) Act, 2025 Act 1136 (b) provide for fiscal responsibility rules and the establishment of an independent Fiscal Council to promote budget credibility, macroeconomic stability and fiscal and debt sustainability. (2) For the purpose of paragraph (a) of subsection (1), there shall be established (a) a framework to support a sound fiscal policy and the macroeconomic management of public funds; (b) processes for the preparation, approval and management of a transparent, credible and predictable annual budget; (c) mechanisms for the operation of the Consolidated Fund; (d) mechanisms for the management of public funds, assets and liabilities; (e) internal and external audit frameworks and correlative reporting and accounting systems; and (f) a mechanism to oversee the matters specified under paragraphs (a) to (e). (3) For the purpose of paragraph (b) of subsection (1), the fiscal responsibility rules shall (a) ensure fiscal discipline; (b) prevent fiscal slippages; (c) improve fiscal and debt sustainability; and 3 Act 1136 Public Financial Management (Amendment) Act, 2025 (d) correct any other distorted incentives.”. Sections 2A to 2D inserted 2. The principal enactment is amended by the insertion after section 2, of “ Application of Fiscal Responsibility Rules Fiscal responsibility rules 2A. The following numerical fiscal responsibility rules shall apply in the management of public finances: fhj an annual positive primary balance on commitment basis of at least one point five per cent of the Gross Domestic Product shall be maintained; and (b) the public debt to Gross Domestic Product ratio of forty-five percent or lower shall be achieved by the year 2034. Suspension of fiscal responsibility rules 2B. (1) The Minister may, with the prior approval of Parlia­ ment, suspend the fiscal responsibility rules due to (a) a force majeure\ (b) an unforeseen economic circumstance; or (c) a force majeure and an unforeseen economic circumstance. (2) The Minister shall suspend the fiscal responsibility rules pursuant to subsection (1) only where the Minister is of the opinion that the implementation of the fiscal responsibility rules shall be harmful to the fiscal, macroeconomic or financial stability of the country. 4 Public Financial Management (Amendment) Act, 2025 Act 1136 (3) Where the Minister suspends the fiscal responsibility rules, the Minister shall, within one month after the occurrence of the force majeure or unforeseen economic circumstance, submit to Parliament for approval, a memorandum in support of the justification for the suspension of the fiscal responsibility rules. (4) The memorandum shall include (a) the facts and circumstances that gave rise to the suspension of the fiscal responsibility rules in a given financial year; (b) the fiscal impact of the shock on lives and livelihoods; (c) plans for the restoration of the public finances and fiscal responsibility rules of the country within one year after the force majeure or unforeseen economic circumstance has elapsed; and (d) a quarterly break down of the revised primary balance target for the year as part of the budget presented to Parliament. (5) The Council established under section 11A shall provide an assessment on whether any of the circumstances specified in subsection (1) that justify the suspension of the fiscal responsibility rules was present in order to inform the decision of Parliament in the grant of an approval for the suspension of the fiscal responsibility; rules. (6) Where Parliament is on recess, Cabinet may approve the suspension of the fiscal responsibility rules but the approval shall be ratified by Parliament during the next sitting of Parliament after the recess. 5 Act 1136 Public Financial Management (Amendment) Act, 2025 (7) Where Parliament approves or ratifies the suspension of the fiscal responsibility rules, the Minister shall, within fourteen days after the grant of the approval or the ratification of the approval, publish the memorandum for justification of the suspension of the fiscal responsibility rules on the official website of the Ministry. (8) Where the Minister is of the opinion that a restoration of the fiscal responsibility rules in a given financial year may take more than one year after the force majeure or unforeseen economic circumstance has elapsed, the Minister shall request from Parliament an additional time required for the restoration. (9) A request under subsection (8) shall be accompanied with justification for the request. (10) For the purpose of this section, (a) 'force majeure” includes a natural disaster, a public health emergency including a pandemic, a drought or a war where a state of emergency has been declared by the President under article 31 of the Constitution; and (b) “unforeseen economic circumstance” includes (i) an unanticipated severe economic shock including a commodity price shock; (ii) a domestic or global financial crisis or shock that severely affects the bank and non-bank financial system of the country; and 6 Public Financial Management (Amendment) Act, 2025 Act 1136 (iii) a period where the country records an actual negative year-on-year real Gross Domestic Product growth in two successive quarters. Breach of fiscal responsibility rules 2C. (1) Where a fiscal responsibility rule is breached, the Minister shall (a) publish on the official website of die Ministry, the reason for the breach; and (b) within four months after the end of the financial year in which the rule was breached, submit a detailed corrective action plan to Parliament and Cabinet. (2) Where a fiscal responsibility rule is breached, the next budget to be approved by Parliament shall contain the requisite corrective fiscal measures. (3) Where the primary balance rule is breached, a new discretionary project including an infrastructure project that is not essential for a basic service shall not be admitted into the budget until the fiscal situation is corrected. (4) Where the fiscal responsibility rule on public debt threshold is breached, the Minister shall set and implement limits on new borrowing until the debt threshold slippage is corrected. (5) Where the Minister breaches one or more of the fiscal responsibility rules by more than one percentage point in two successive years, Parliament may, in accordance with article 82 of the Constitution, pass a vote of censure on the Minister. 7 Act 1136 Public Financial Management (Amendment) Act, 2025 (6) The head of a covered entity or a Minister of State whose action or inaction contributes to a fiscal slippage shall be sanctioned in accordance with sections 96 to 98 of the Public Financial Management Act, 2016 (Act 921). Review of fiscal responsibility rules 2D. The Minister shall, after the end of every five years, submit to Parliament a review of the fiscal responsibility rules specified in section 2A.”. Sections 11A to 11O inserted 3. The principal enactment is amended by the insertion after section 11, of ‘Fiscal Council Establishment of Fiscal Council 11 A. There is established by this Act, a Fiscal Council. Objects of the Council 1 IB. The objects of the Council are to (a) provide an independent assessment of the fiscal policy of the country and compliance with the fiscal responsibility rules specified in section 2A; and (b) promote transparency, accountability and long-term sustainability in public finances. Functions of the Council 11C. To achieve the objects of the Council, the Council shall (a) monitor and assess compliance with the fiscal responsibility rules specified in section 2A; 8 Public Financial Management (Amendment) Act, 2025 Act 1136 (b) assess macroeconomic forecasts for budgetary projections to promote budget credibility and reliability; (c) provide Government with recommendations in respect of fiscal policy and compliance with the fiscal responsibility rules; (d) for the purpose of promoting transparency, publish reports and assessments in accordance with subsection (5) of section 95A to inform the public about the fiscal behaviour of Government towards adherence to the fiscal responsibility rules; (e) appear before the Parliamentary Committee responsible for the budget and provide the Parliamentary Committee with an assessment ofthe adherence of Government to the fiscal responsibility rules; (f) evaluate the outcomes and effectiveness of fiscal policies and budgetary operations; (g) hold media engagements, at least twice in a year, to update the public on the findings and recommendations of the Council; and (h) in accordance with section 2D, advise the Government on the review of the fiscal responsibility rules. Membership of the Council 11D. (1) The Council consists of (a) the chairperson; (b) a representative from (i) academia; and 9 Act 1136 Public Financial Management (Amendment) Act, 2025 (ii) a research think tank; (c) a former public policy expert from the Ministry responsible for Finance; and (d) a former public policy expert from the Bank of Ghana. (2) The President shall appoint the chairperson and other members of the Council with the approval of Parliament. (3) The President shall, in appointing the chairperson, have regard to (z? expertise in economics or public finance; and (b) leadership qualities. (4) A person is qualified to be a member of the Council if that person (a) is a citizen; (b) has not been adjudged to be a person of un­ sound mind; (c) is a person of high moral character and proven integrity; (d) is a person with at least ten years’ professional experience in macroeconomics, fiscal matters or any other related field; (e) has not been suspended from practising the profession of that person by an order of a competent authority made in respect of that person; and (f) does not hold any position in Government. 10 Public Financial Management (Amendment) Act, 2025 Act 1136 (5) Members of the Council shall, before assuming office, take and subscribe to the Official Oaths as specified in the First Schedule. Tenure of office of members of the Council HE. (1) A member of the Council shall hold office for a period of four years and is eligible for re-appointment for another term only. (2) A member of the Council may, at any time, resign from office in writing addressed to the President. (3) A member of the Council who is absent from two consecutive meetings of the Council without sufficient cause ceases to be a member. (4) The President may, by letter addressed to a member, revoke the appointment of that member. (5) Where a member of the Council is, for sufficient reason, unable to act as a member, the chairperson in consultation with the Minister shall determine whether the inability would result in a declaration of a vacancy. (6) Where there is a vacancy (a) under subsection (2), (3), (4) or subsection (2) of section 11G, (b) as a result of the declaration under subsection (5), or (c) by reason of the death of a member, the chairperson shall notify the President of the vacancy and the President shall, subject to subsection (2) of section 1 ID, appoint another person to fill the vacancy for the unexpired term. 11 Act 1136 Public Financial Management (Amendment) Act, 2025 Meetings of the Council 11F. (1) The Council shall meet at least four times in a year for the conduct of business at a time and place determined by the chairperson. (2) The chairperson shall, at the request in writing of not less than one-third of the membership of the Council, convene an extraordinary meeting of the Council at a time and place determined by the chairperson. (3) The quorum at a meeting of the Council is three members. (4) The chairperson shall preside at meetings of the Council and in the absence of the chairperson, a member of the Council elected by the members present from among their number shall preside. (5) Matters before the Council shall be decided by consensus. (6) Despite subsection (5), where consensus is not reached on a matter before the Council, that matter shall be decided by a majority of the members present and voting and in the event of an equality of votes, the person presiding shall have a casting vote. (7) The Council may co-opt a person to attend a meeting of the Council but that person shall not vote on a matter for decision at the meeting. (8) The Council shall, subject to this section, regulate the procedure for meetings of the Council. Disclosure of interest 11G. (1) A member of the Council who has an interest in a matter for consideration by the Council shall (a) disclose, in writing, the nature of the interest and the disclosure shall form part of the 12 Public Financial Management (Amendment) Act, 2025 Act 1136 record of the consideration of the matter; and (b) not participate in the deliberations of the Council in respect of the matter. (2) A member ceases to be a member of the Council if that member has an interest in a matter before the Council and (a) fails to disclose the interest; or (b) participates in the deliberations of the Council on the matter. (3) Without limiting any further cause of action that may be instituted against the member, the Council shall, in addition to the revocation of the appointment of the member, recover any benefit derived by a member who contravenes subsection (1). Allowances 11H. Members of the Council shall be paid allowances approved by the Minister. Independence of the Council 111. The Council is not, in the performance of functions specified under this Act, subject to the control or direction of any person or authority. Administration of the Secretariat Secretariat of the Council 111. (1) The Council shall have a Secretariat. (2) The Council shall, in consultation with the Public Services Commission, appoint as the head of the Secretariat, a person with (a) a legal and an administrative background; and 13 Act 1136 Public Financial Management (Amendment) Act, 2025 (b) a master’s degree in a discipline related to fiscal matters; and (c) the requisite experience in public finance or any other related field. (3) The Council shall, in consultation with the Public Services Commission, appoint other staff for the Secretariat that are necessary for the efficient and effective performance of the functions of the Secretariat. Functions of the Secretariat 11K. The Secretariat shall (a) manage the day-to-day operations of the Council; (b) record and keep the minutes of meetings of the Council; (c) maintain the records of the Council; (d) provide an in-depth analysis of fiscal policies, budget proposals, and economic data to support the decision-making process of the Council; (e) conduct research on issues on fiscal policy; (f) prepare reports on the recommendations of the Council and public communications engaged by the Council; (g) publish the statutory reports and papers of the Council; (h) develop strategies for public engagement for the purpose of ensuring transparency and understanding of fiscal policies among citizens; and 14 Public Financial Management (Amendment) Act, 2025 Act 1136 (i) perform any other function that the Council may assign. : Finances of the Council Funds of the Council 11L. The funds of the Council include (a) moneys approved by Parliament; and (b) donations, gifts and grants. Bank account 11M. The moneys for the Council shall be paid into a bank account opened for the purpose by the Council with the approval of the Controller and Accountant-General. Accounts and audit UN. (1) The Council shall keep the books, records, returns and other documents relating to the accounts of the Council in the form approved by the Auditor-General. (2) The Council shall submit the accounts of the Council to the Auditor-General for audit not later than two months after the end of each financial year. (3) The Auditor-General shall, within six months after the end of the immediately preceding financial year, audit the accounts of the Council and forward a copy of the report to Parliament and the Council. (4) The financial year of the Cppncil is the same as the financial year of Government. 15 V. Act 1136 Public Financial Management (Amendment) Act, 2025 Annual report and other reports 11O. (1) The Council shall, within thirty days after the receipt of the audit report, submit an annual report to the Minister covering the activities and operations of the Council for the year to which the annual report relates. (2) The annual report shall include the report of the Auditor-General. (3) The Minister shall, within thirty days after the receipt of the annual report, submit the report to Parliament with a statement that the Minister considers necessary. (4) The Council shall submit to the Minister in writing any other report which the Minister may require.”. Section 12 of Act 921 amended 4. The principal enactment is amended by the substitution for section 12, of “Application of sections 13 to 15 12. (1) The provisions of sections 13 to 15 apply to the central Government. (2) The Minister may, by legislative instrument, extend the application of sections 13 to 15 to local government authorities and public corporations.”. Sections 16 to 18 of Act 921 amended 5. The principal enactment is amended by the repeal of sections 16 to 18. Sections 35 of Act 921 amended 6. The principal enactment is amended in section 35 by the substitution for subsection (4), of 16 f Public Financial Management (Amendment) Act, 2025 Act 1136 “(4) The Minister shall ensure that supplementary expenditure under a Supplementary Appropriation Bill is not likely to breach the objectives, targets, or rules set out in the Fiscal Strategy Document.”. Section 80 of Act 921 amended 7. The principal enactment is amended in section 80 by the substitution for subsection (1), of “ (1) A Principal Spending Officer of a covered entity shall, within two months after the end of each financial year, prepare and submit to the Auditor-General and Controller and j Accountant-General, the accounts and information set out in the Second Schedule.”. Section 81 of Act 921 amended 8. The principal enactment is amended in section 81 by the substitution for subsection (1), of “ (1) The Controller and Accountant-General shall, within three months after the end of each financial year, prepare and submit the following consolidated accounts to the Minister and the Auditor-General: (a) the consolidated annual accounts of Government including the accounts specified in the Second Schedule; (b) the accounts of the Contingency Fund; and (c) the accounts of the Petroleum Funds.”. Sections 95A and 95B inserted 9. The principal enactment is amended by the insertion after section 95, of 17 Act 1136 Public Financial Management (Amendment) Act, 2025 “Reporting 95A. (1) The Minister shall submit a quarterly report to Cabinet on the fiscal performance and adherence to the fiscal responsibility rules with a lag period of three months. (2) The report referred to in subsection (1) shall propose corrective measures in instances where quarterly targets are breached. (3) The Minister shall publish on the official website of the Ministry, an annual report on compliance with the fiscal responsibility rules and submit the report to Parliament by the end of April in the ensuing financial year. (4) Where there is a deviation from the targets of the fiscal responsibility rules, the report shall include corrective fiscal measures and a timetable for returning to the targets of the fiscal responsibility rules. (5) The Council shall publish (a) the first half-year assessment report on compliance with the fiscal responsibility rules not later than September after the end of each financial year; (b) an annual assessment report on compfiance with the fiscal responsibility rules not later than April after the end of each financial year; and (c) any other analytical report on fiscal performance and outlook that the members of the Council may determine. 18 Public Financial Management (Amendment) Act, 2025 Act 1136 Request for information 95B. (1) The Council may, in writing, request a public entity to provide the Council with relevant information to enable the Council perform the functions under this Act. (2) A public entity shall, within fifteen days after the date of receipt of the request, provide die Council with the information requested.”. Section 101 of Act 921 amended 10. The principal enactment is amended in subsection (1) of section 101 by the insertion after paragraph (b), of “(bA) to ensure fiscal discipline, budget credibility and fiscal transparency; (bB) to strengthen the independence and operational efficiency of the Council;”. Section 102 of Act 921 amended 11. The principal enactment is amended in section 102 by the insertion of the following definitions in the appropriate alphabetical order: ““annual positive primary balance” means the positive difference between revenues and non-interest expenditures for a fiscal year; “Council” means the Fiscal Council established under section 11 A; “distorted incentives” means incentives that are counter to the fiscal objectives in the national budget; “economic shock” means a sudden and unexpected event that significantly impacts an economy positively or negatively; 19 Act 1136 Public Financial Management (Amendment) Act, 2025 “expenditure overages” mean excess expenditure over programmed expenditure targets; “fiscal responsibility rules” means a long-standing constraint on fiscal policy through numerical limits on budgetary aggregates; “fiscal slippage” means the failure to achieve a fiscal target in the national budget; “net change in stock of payables” means accumulation of new payables minus arrears clearance over a period; “non-interest expenditure” means expenditure excluding interest payments; “price shocks” means a sudden appreciable increase or decrease in price; “primary balance on commitment basis” means the difference between revenues and non-interest expenditures on cash basis plus net change in stock of payables; “public debt” means a guaranteed debt of the central Government; and “severe economic shock” means an economic shock that causes a year-on-year real Gross Domestic Product growth rate to contract in two successive quarters.”. Section 103 of Act 921 amended 12. The principal enactment is amended in section 103 by the substitution for subsection (1), of “(1) The following Acts are repealed: (a) the Loans Act, 1970 (Act 335); 20 Public Financial Management (Amendment) Act, 2025 A.ct 1136 (b) the Financial Administration Act, 2003 (Act 654); and (c) the Fiscal Responsibility Act, 2018 (Act 982).”. First Schedule inserted 13. The principal enactment is amended by the insertion before the Schedule, of 21 Act 1136 Public Financial Management (Amendment) Act, 2025 “FIRST SCHEDULE OFFICIAL OATHS (section 11D(5)) PART A OATH OF OFFICE do (in the name of the Almighty God swear) (solemnly affirm) that I will at all times, well and truly serve the Republic of Ghana, in the office of and that I will uphold, preserve and defend the Constitution of Republic of Ghana as by law established (so help me God.). (To be sworn before the Minister or any other person as the President may designate). PARTB OATH OF SECRECY I, holding the office of .................................................. do (in the name of the Almighty God swear) (solemnly affirm) that I will not directly or indirectly communicate or reveal to any person any matter which shall be brought trader my consideration or shall come to my knowledge in the discharge of my official duties except as may be required for the discharge of my official duties or as may be specifically permitted by law (so help me God). 22 Public Financial Management (Amendment) Act, 2025 Act 1136 (To be sworn before the Minister or any other person as the President may designate).”. Schedule to Act 921 amended 14. The principal enactment is amended in the Schedule by the substitution for the heading, of “SECOND SCHEDULE”. Date of Gazette notification: 2nd April, 2025. 23 PRINTED BY GHANA PUBLISHING COMPANY LTD. ASSEMBLY PRESS, ACCRA. 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