June, 2024

Are you aware that the President of Ghana has approved the Contracts (Amendment) Act, 2023 (Act 1114) which forbids the state from entering into contracts that provide for compound interest payment? Read our latest legislative alert to find out more.

Legislative Alert:

The Contracts (Amendment) Act, 2023 (Act 1114), was passed into law by Parliament in July, 2023, was presented to the President for his assent on 5^th March, 2024 and same was assented to on 8^th March 2024. The law seeks to prevent public officers from entering into contracts with high rates of interest especially compound interest, which result in huge financial losses to the state.

Prior its amendment, the Contracts Act 1960 (Act 25) did not make explicit provisions regarding persons authorised to enter into contracts on behalf of the state, as well as the type of interest and method for the calculation of interests due on government contracts.

The amendment therefore sought to fill the gaps in the law, by defining clearly, persons who are qualified to enter into contracts on behalf of the state. These persons have been defined as ministers of state or persons authorised by ministers to enter into contracts on behalf of the state. The amendment also provided the formula for calculating interests’ due parties under state contracts.