E27: The Framework That Could Stop Ghana From Creating More Debt

You and a business partner run a company together. The business has one rule: before making any major purchase or signing any contract, you must first confirm that the company has enough money to meet that commitment.

One day, your partner signs several contracts with suppliers without checking the company’s financial position.

At first, everything seemed fine. But when the suppliers come asking for payment, you discover that the business cannot settle the bills.

You are shocked. "But I didn't approve these contracts. I didn't make these promises. Why should the business suffer because of these decisions?"

The problem is that those contracts were signed in the name of the company. Even though you were not the person who made the decisions, the consequences affect the entire business.

This is similar to one of the challenges Ghana has faced with public finances.

This is episode 27 of “What This Finance News Means for Ghanaians 🇬🇭” where I break down finance news and share my thoughts in a simple and practical way.

Over the years, some State-Owned Enterprises (SOEs) accumulated financial obligations they could not meet. When these institutions failed to honour their commitments, the government often had to step in.

But those debts do not simply disappear. They are paid through public resources—money from taxes, government revenue, and sometimes borrowing.

This means funds that could have supported healthcare, education, infrastructure, and job creation may instead be used to settle obligations created by previous commitments.

According to Ghana’s 2026 Mid-Year Fiscal Policy Review, the liabilities of State-Owned Enterprises added the equivalent of about 3% of Ghana’s GDP to public debt every year over the past decade.

This shows that Ghana’s debt challenge was not only caused by government spending more than it earned. It was also caused by institutions making commitments without enough controls to ensure those commitments could be fulfilled.

To curb this, the Commitment Authorisation Framework is being utilised.

The framework is a public financial management control system designed to ensure that government institutions do not make financial commitments without proper approval and planning.

Before Ministries, Departments, Agencies, and State-Owned Enterprises can award contracts or commit public funds, they must receive prior written approval from the Ministry of Finance.

Think of theCommitment Authorisation Framework as a financial checkpoint. Before a government institution makes a promise to spend public money, it cannot simply sign a contract and figure out payment later. It must first prove that the commitment is approved, needed, and backed by proper financial planning.

The goal is simple: Prevent today’s promises from becoming tomorrow’s taxpayer debt.

The inclusion of State-Owned Enterprises in this framework is a significant change because it means they are now expected to operate with greater financial discipline. They cannot make commitments without considering whether they have the resources and approval needed to fulfil them.

For Ghana to build a sustainable economy, managing existing debt is important. But equally important is building systems that prevent unnecessary debt from being created in the first place.

As citizens, we have a role to play in understanding how public money is managed and holding institutions accountable for the decisions they make.

Do you think stronger controls like the Commitment Authorisation Framework can help Ghana prevent future debt challenges?

Share your thoughts in the comments.