Ato Forson unveils plan to tighten loan use after debt deal
Ghana is set to introduce a new legal framework to regulate public borrowing, in a move aimed at enforcing stricter fiscal discipline and ensuring that loans deliver tangible economic value.
The Finance Minister, Dr. Cassiel Ato Forson, announced plans for a proposed Loans Act shortly after the country signed its 11th bilateral debt restructuring agreement with EXIM Bank of India. He described the initiative as a key pillar in the government’s efforts to reset Ghana’s debt management strategy.
Under the proposed legislation, all public borrowing will be tied to clearly defined, high-impact investments, with an emphasis on value for money. The measure is intended to curb non-essential borrowing and ensure that loans are channelled into projects that generate measurable economic and social returns.
Officials say the move forms part of broader efforts to consolidate gains made under Ghana’s ongoing debt restructuring programme, which has seen the country renegotiate terms with bilateral creditors. The government maintains that improving macroeconomic conditions and consistent compliance with restructured obligations are gradually reducing the country’s risk of debt distress.
Dr Forson stressed that the new law would mark a significant departure from past borrowing practices, anchoring a more disciplined and accountable approach to public finance. He noted that future decisions on loans would be guided by a clear principle that any debt incurred must translate into real benefits for citizens.
The planned legislation is also expected to complement ongoing public financial management reforms aimed at strengthening oversight, improving investment efficiency and safeguarding long-term fiscal stability.
Analysts view the proposed Loans Act as a critical step towards preventing a return to unsustainable debt accumulation, while reinforcing confidence in Ghana’s economic recovery efforts.
Background
Having completed the restructuring of domestic debt, which achieved about 85 per cent outturn, the government turned to external creditors, including both bilateral and commercial creditors.
On December 19, 2022, the government announced the suspension of external commercial obligations to enable it to renegotiate its domestic, external and bilateral debts.
Following the formation of the Creditor Committee of the Paris Club, backed by China, the government began debt restructuring negotiations with its bilateral creditors in a bid to restructure debts of about $5.4 billion.
The government signed a Bilateral Debt Restructuring Agreement with Spain, the fifth such agreement concluded under the country’s official creditor framework.
Earlier, bilateral agreements had been concluded with China Exim Bank, France, Finland, Spain, the United Kingdom, Germany and Belgium.
The signing of the restructured loan agreements forms part of Ghana’s ongoing efforts to restore debt sustainability and strengthen the foundations for economic recovery.
