The government wants to tighten the process for securing public contracts while giving successful contractors greater certainty that they will be paid, according to Frederick Amissah, Technical Adviser to the Ministry of Finance.
Amissah said the approach is intended to move away from a system where contractors can win government projects, secure bank financing to execute them and later struggle to receive payment because the required funds were not available.
He made the remarks during a roundtable discussion at the Chartered Institute of Bankers Ghana (CIB Ghana) Post-MPC Policy Seminar.
He said government contracts have in some cases created arrears because public institutions entered into expenditure commitments without having a clear plan or budget to meet the resulting obligations.
Under the approach being pursued by the Ministry of Finance, public institutions will have to establish that funding is available before they can commit government to a contract.
Amissah said the objective is not necessarily to increase the number of government projects, but to ensure that projects that receive approval have a credible funding arrangement behind them.
“We want to enter a regime where it is difficult to get a government contract, but you are assured that when you get a government project, you will be paid,” he said.
The policy also has implications for banks that finance contractors working on public projects.
Contractors often borrow to mobilise resources, purchase materials and execute projects before receiving payment from government. Where payment is delayed, the contractor can struggle to service the associated bank loan.
Amissah said this creates a chain of risk that can move from government to contractors and eventually onto banks’ balance sheets.
He said the Ministry of Finance has therefore strengthened its commitment controls to prevent ministries, departments, agencies and state-owned enterprises from entering into contracts without first establishing the availability of funds.
The system requires government entities to obtain Commitment Authorisation from the Ministry of Finance before entering into such commitments.
Amissah said the authorisation also gives banks a basis for assessing whether a contractor seeking financing has a government-backed project with an identified funding source.
The change is part of a broader effort to prevent the recurrence of the large stock of arrears inherited by the government in 2025.
Amissah said the government inherited GH¢68.8 billion in arrears and has since been validating and settling legitimate claims while putting controls in place to prevent new obligations from accumulating.
The intended result, he said, is a public contracting environment in which obtaining a government project requires stronger financial discipline, but contractors who successfully secure projects can have greater confidence in receiving payment.
