A provision in the Local Government Act 462 of 1993, which limits Metropolitan, Municipal and District Assemblies (MMDAs) to borrow not more than GHS2,000 for developmental purposes, is soon to be repealed.

Finance and Economic Planning Minister Seth Terkper, disclosed this at a consultative meeting of members of four parliamentary select committees including the Finance, Public Accounts, Local Government, and the Legal and Constitutional Committees in Koforidua.

The consultative meeting discussed two bills – Public Financial Management and Accountability (PFMA) and Local Government Borrowing – that are being finalised for submission to Cabinet for approval.

According to the Finance Minister, when the Local Government Borrowing bill is eventually passed, MMDAs would have the autonomy to borrow any amount for short-, medium- or long-term economic and social infrastructural development.

He said the bill would also establish a Local Government Lending Agency as the central agency responsible for lending to District Assemblies.

"The amount that may be borrowed shall be determined by an analysis of the MMDAs' debt sustainability and their capacity to service the debt,” Mr Terkper disclosed.

"MMDAs are not limited to borrowing from the lending agency; the bill provides for concessionary loans from development partners, other lenders, and investors, with the approval of the Minister for Finance who must stipulate the terms and conditions of the borrowing."

He stressed that matters of securities for the monies borrowed by MMDAs to ensure they do not become debts of central government are stipulated in the bill.

On the PFMA bill, Seth Terkper disclosed that when passed, it would as well repeal the Financial Administration Act, 2003, Financial Administration Amendment Act, 2008 and the Loans Act of 1970.

He said the new PFMA bill would serve as the overarching legislation governing the management of public funds, which would also seal leakage in the public funds.

"Sanctions relating to commitments made, resulting in financial obligations for the government, refusal to produce or submit any information required under the Act, failure to collect monies due government and improper payment of public funds not duly verified in line with existing procedures among others are clearly defined," he added.