Finance Minister Dr. Cassiel Ato Forson has said that the widespread and unchecked awarding of government contracts is a significant threat to Ghana’s fiscal health.
Dr. Forson criticised the entrenched practice of state institutions bypassing financial controls to commit the government to contracts without prior approval or guaranteed funding.
“Ghana’s biggest problem is the way we award contracts, ”I have never seen a country where every state agency can just award a contract without the necessary clearance, normally from the Ministry of Finance. That is Ghana’s biggest fiscal problem,” Dr. Forson said.
He explained that many government entities continue to sign contracts independently and later submit the financial obligations to the Ministry of Finance for payment, regardless of whether funds are available. This leads to unpaid bills, rising interest on delayed payments, and mounting arrears.
“If the Ministry of Finance doesn’t have the money to pay, interest begins to accumulate. It’s a cycle that has gone unchecked for far too long,” he said.
Dr. Forson traced the problem back several years, lamenting that efforts to fix it through legislation had been largely ignored. He commended former Finance Minister Seth Terkper for introducing safeguards in the Public Financial Management (PFM) Act of 2016, which was designed to bring discipline and accountability to public contracting.
“We cured it in the PFM Act in 2016. Mr Seth Terkper introduced it to prevent this exact problem. But unfortunately, the law was never respected,” he said.
The Minister warned that the continued flouting of procurement and financial protocols is draining national resources and limiting the government’s ability to fund essential development programmes, especially at a time when the country is implementing an IMF-supported fiscal recovery plan.
“These unapproved contracts lead to ballooning arrears, interest payments, and even legal liabilities that crowd out productive spending,” he added. “If we don’t end this culture, Ghana’s economy will continue to struggle no matter how much we grow.”
Dr. Forson emphasized that the current administration is taking steps to enforce compliance with the PFM Act and restore order to the contracting process, including stricter oversight and sanctions for violations.
