Ghana's public debt increased by an amount equal to 3% of its Gross Domestic Product (GDP) each year for the last ten years. This significant rise was primarily due to the unchecked liabilities of state-owned enterprises (SOEs), according to Finance Minister Dr. Cassiel Ato Forson. He made this announcement during the 2026 Mid-Year Budget Review in Parliament on Thursday, July 23.
Dr. Forson stated that SOEs have now been brought under the government's commitment authorisation regime for the first time. This new rule prevents them from spending beyond their allocated means. The move addresses a major driver of the nation's debt crisis, which has burdened the public purse for a decade.
This persistent failure by SOEs to meet their contractual obligations forced successive governments to assume and settle these debts. This practice placed an enormous financial burden on the country. The Finance Minister highlighted that these liabilities contributed significantly to the sharp rise in Ghana's public debt.
Dr. Forson explained that resources that should have financed critical infrastructure were instead used to pay off SOE debts. He noted, "The resources that would have financed critical infrastructure were used to pay those SOEs' debt." This situation meant Ghana's debt grew unsustainably without corresponding investments in essential projects like bridges, roads, or hospitals.
The Finance Minister emphasized that enforcing fiscal discipline only within ministries and government departments would be ineffective if SOEs continued to accumulate liabilities. He questioned the point of such discipline if taxpayers ultimately paid for SOE overspending. This highlights the need for a comprehensive approach to fiscal management.
Ghana's debt challenge was not solely driven by fiscal deficits, but also by the unchecked accumulation of liabilities by SOEs. Dr. Forson stressed that the commitment authorisation regime would have been meaningless if SOEs were excluded. Their inclusion is crucial for effective public financial management.
Bringing SOEs under this framework is part of broader public financial management reforms. These reforms aim to strengthen fiscal discipline across all government-related entities. The goal is to improve debt sustainability and prevent the recurrence of off-balance-sheet liabilities. Such liabilities have historically contributed to Ghana's escalating debt.
The government's action signals a serious commitment to fiscal responsibility. This will be closely watched by investors and international financial institutions. The success of this new regime will determine Ghana's ability to manage its debt and free up resources for development. This policy shift could lead to more stable economic growth and improved public services in the long term.