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Introduction: Ghana gets a second chance for fiscal stabilization There are several reasons to describe The Republic of Ghana, the sovereign state of Sub-Saharan Africa, as ‘The Rising star of Africa’, ‘African tiger’ or ‘The Beacon of Hope’. Ghana’s per capita output is twice as big, when compared to neighboring countries, Ghana has strong attributes of democratic culture and stability, moreover - it has newer oil findings (The BBC, 2007). Ghana was affected, but it resisted a recent economic crisis because of cocoa production and gold. Ghana seeks to become the most developed country in Africa by 2030, presenting the framework for sustainable socio-economic development. Ghana has the chance to fulfill its goals or to continue the paradox of African countries, rich in resources, but poor in economic growth. Unfortunately, Ghana is still subordinate of international assistance, raising debt and showcasing fiscal indiscipline, scoring poorly on international reports. Public finances are not well managed, and with new revenue potentials following the oil explorations, Ghana is faced with presenting a valuable strategy to resource allocation, prioritizing vital public services as a reflection of fiscal control (BroniBediako, 2010). If Ghana wants to benefit, it needs long-term development strategies, furthermore, sustainable legal framework for successful revenue management. It is particularly timely to review measures, track performance and expenditures of existing programs and consolidate budget reports and align performance with the government’s policies. The public administration will have to confront these challenges and face the high expectations in approach to natural resources. While such objectives are relatively straightforward, their realization can be challenging (Andrews, 2010). This paper covers several financial reports, examples of patterns and advice in the upcoming financial management opportunities. Political will to introduce debt controls and deficit reduction, present opportunities to restructure administrative and funding aspects. Public expenditure: Small mismanagement causes big problems For international institutions such as World Bank, and several international research reports, Public Financial Management (PFM) systems of African countries, as Ghana, “have not yet established the basic prerequisites for adopting policy based budgeting” (World Bank, 2011). PFM seems “robust but not well executed” (The Republic of Ghana, Ministry of Finance, 2013). In other words, they work on paper, as in legislatives and frameworks, but not in real life - service
as in many African countries. 2010. The Controller and the Accountant General’s Department (CAGD) oversees expenditure transactions and revenue.delivery. but shows respect for international recommendations. In alignment with such pyramidal construction of counted difficulties. predicting and controlling neither revenue. obviously neglecting accounting records. Document is addressing the stated problems but it is presented as summarizing checklist and descriptive framework rather that productive implementation strategy. Reports show that expenditure was raised above set estimates #" " . legislative scrutiny of the annual budget law. weak audit scrutiny slows down rational outcomes and progress. In the case of Ghana. Delays. Although these are good guides. 2011).. as those are often impossible to measure. Such problems find grounds in disorganized spending and debt raising. nor expenditure. legislative scrutiny of external audit reports” (Quist et al. a macro-fiscal framework. centralization and disordered decisions cause bigger problems.. Ghanaian institutions make their efforts but with feeble results (Betley et al. As a response to such warnings Government of Ghana (GoG) published The Joint Review of Public Expenditure (World Bank. According to Public Expenditure and Financial Accountability (PEFA) assessment (Quist et al. 2011). 2012). mainly responsible for the budget. Danida and AfDB (Betley. those appear as a result of unrelated and disconnected budget maneuvers as there is no clear linkage or joint between different ministries. Ghana is “diagnosed” with: “aggregate expenditure out-turn compared to the original approved budget. achieving short-term agendas (Gollwitzer. performance budgeting and integrated financial management. Bird and Ghartey.. In short. As stated earlier. being focused on Developing Partners (DP) agreement. problems with budget credibility. 2010). predictability in reports. Ghana has problems accomplishing basic when it comes to allocation of resources. also the Internally Generated Funds (IGF) reports are available annually (Quist et al. aggregate revenue out-turn compared to the original approved budget. pp 40). As most African countries. 2012). The Ghanaian PEFA report seems aligned with joint evaluation commissioned by Sida. departments and agencies (MDA). such reports only indirectly appoint to the real management problems. Ghana has problems with credibility of the budget. The absence of such connections leads to an alarming deficiency of protocols and guides in decision-making. top-down budgetary discipline and adequate expenditure control are clearly declared (Economic Commission for Africa. short-term planning. Most of the framework is done at Ministry of Finance and Economic Planning (MoFEP). causing inflation and loosing policy credibility. Furthermore. GoG is increasing debt and deficit.. 2010). 2010).
There is a big separation of budget executions and budget approvals. problems whit current controls and systems formulation are clearly present (Ackah et al. On lower levels of government. when elections budget was exceeded. but still. Public access on the budget is granted. making it difficult to get a comprehensive picture on Government spending” (World Bank. Ministry of Finance. Credibility of budget is reasonable question. The PEFA report implies that Ghana made its costing based on actual consumption. As records show. Even when a controlling framework exists it seems behaviors do not respect such procedures. the monitoring mechanism is still questionable. 2009. In January 2009 GoG adopted a macro-economic stabilization program with help of Word Bank and IMF (World Bank. 2011). with disrespect towards the international and internal debt. especially when they involve multiple players. GoG joint report declared “accounting for and reporting on public expenditures is split between various institutions. Quist et al. In addition. faulty budgeting performance is a result of unclear objectives in application.and state’s borrowings were in excess. Some legal definitions of discretionary elements of legal framework are addressed $" " . Reports on expenditure are not released in time. As a lack of fiscal discipline. 2011). spending more than planned. ignoring the domestic borrowings approved (World Bank. it becomes difficult to optimize allocation between sectors and control over exceeding budget resolving in social growth and service quality.. Ghana’s unstable financial reporting and unpredictable budget executions are connected with low control of framework implementation. Such delays make other financial variables even more unpredictable. 2013). Unpredictable budget releases with no bonds in policies or long-term goals create even more displacement in fiscal discipline and reforms that are undertaken in support of developer programs. 2010. 2012). Betleyet al. With no priorities. 2011). Some scholars clearly state that there is no control over financial decisions when it comes to entities outside the central government. Although some records on resources are controlled and transparently presented it seems no connections to long-term goals or objectives are addressed in micro planning (The Republic of Ghana. the country was not keeping tight enough control of its spending (World Bank. especially on procurements and expenditure. making it difficult to manage resources with quality.. there are no institutional arrangements to coordinate PFM activities. No appropriate sequencing or coordination is presented. or just 3-year reform strategies. There were delays in the time the legislature has to review the budget. Ministries make 3-year plans to present objectives. This is what happened in 2008. Coordination problems of Ghana were addressed earlier and shift towards the stronger framework was made. however insights to inner control and discipline are somehow hidden. 2013).. However. in-year amendments to the budget were not respected in many instances. ungovernable decisions were made. GoG in Joint Report addressed this problem claiming budgets are more policy based and aligned with strategies such as Ghana Poverty reduction strategy. And while a legal and regulatory framework is clear. rather than longer political programs and objectives.
answers to Ghana’s problems might be inside such practice. higher scores in PEFA assessments can be achieved just by proclaiming new practice law or formal arrangements with no performance measurements or values. all of the issues mentioned above. forced Ghana to audit reports as suggested. Reports clearly imply that there are no connections in the passage of laws. PFM stays in the center of political power (MoFEP) where most of the decision-making is made with no base-up communication. The revenue administration is regularly reported but with no signs of unlisted budgetary activity. no to truly reform. Most financial reports rely on such central government institutions without detailed surveys of departments and agencies. Moreover. Lastly. undermines service delivery. 2010. but with no safeguards or restrains when it comes to exceptions. Betleyet al. especially in social sectors. however. At the end. downsizing up from below budget participation (Andrews. agencies and departments. The key problem with the problems stated is that they are products of international one-dimensional. real life experience. So. Secondly. No attention to payroll costs and budget execution.as the cause of unpredictability and insufficient inner control. The key problem is that international reports do not study the procedures of implementation. These agencies have transactions but see no accountability for results. weather that is about local governments or community involvement. it is clear that outer agencies and departments still do not have the same principles in financial decisions and services investments. Opening questions of fraud and corruption. Even with such discovery. leaving the important political lessons behind. are reflected in inadequate public services. thus implementation. no internal control leaves most of reforms paralyzed (Quist et al. Firstly. It seems Ghana has problems in such horizontal context. Regulations need to be made and supervised (De Renzio. unreported budget activities and general cross-departmental disorganization are further constraints to the progressive financial management. and managing knowledge in familiar surroundings and therefore might be misleading.. execution is neglected as it is in tight relation with management on lower levels that are often not accessible by researches. Attempts to put control over these circumstances were more in a service of centralization.. World Bank.it involves managing people in retrospect with regulations in lower structures. 2011). Developers provided technical skills without regards to context and underlying processes of affiliated financial management. Ghana’s systems bends rules and procedures to gain more aid. It seems that unmotivated senior administrative officials do not pursue budgeting beyond their office. 2010). The existence of an inefficient system of control and budget administration. 2009). 2009). without in depth analysis (De Renzio. Reforms in Ghana are focused mainly on recommendation executions. this weakness makes administrators rely on DPs and fiscal discipline is reflected on service delivery efficiency. As %" " . 2012. This proves the point of decentralization as being more difficult . opening the questions on corruption. World Bank 2009.
Making studies and allowing funds to flow on the highest rate of return. Oil opportunities might act as a spark to catalyze suitable reforms. Luckily. lying between the lines of reports. but are often corrective to past political decisions. that are based on newly PFM practice. countries’ differences in adaptation may be the key to prosperity. connecting and aligning smaller parts. Setting institutions to manage oil revenues should not take place before establishing effective budget control systems (WordBank. making universal ‘how to’ recipes. Establishing control and inner procedures becomes solid ground for further reforms.. Making reforms sequenced makes directives and stuff easier to set with priorities. is the first and often most neglected step in reform”. countries like Ghana often present huge long goals rather than taking step-by-step processes. Emphasizing set of short and measurable reforms and a thorough improvement of existing systems is essential before adaptation to newly favorable circumstances. That can be reached by a combination of different approaches that are introduced by previous reports. Finally. and making budget processes in time (Economic Commission for Africa. before going to more advanced reforms (Andrews. Reports from institutions are good measuring tool. Going from less systematic. and create momentum for clear and systematic changes. Not creating new disorganized structures. Furthermore. Moreover. Working with what is there. et al. 2010). Aligning small goals as a secret to big success Clearly. similarities in African countries’ development (or underdevelopment) are a possible result of unified criteria of such reports rather that countries affinitive (Gollwitzer. but moreover. vital in stabilization of existing management procedures. 2010). such practice clearly established the additional space for reforms based on local knowledge. 2011).demonstrated with 2008 election budget problems. resolving smaller problems to demolish bigger ones. 2010). comprehensiveness of such reports can be applied to numerous African governments. As Peterson (2011. 2013). political games focused on and gaining public recognition rather than practical results and movement. meaning understanding and respecting what exists. Broni-Bediako. 2011. Still. 2011). cheaper and less risky” (Peterson. &" " . experiences and context. conducted reforms are not only reflections of external agencies’ efforts. When improving PFM systems. pp 210) emphasized Schick: “Recognizing. Ministry of Finance. that is. they are more to be used as flexible guidelines rather than a list of goals. however. Ghana needs fiscal adjustments in order to reduce expenditures and gain control (The Republic of Ghana. Real solutions are to be find in differences. lists of favorable solutions are often ‘copy pasted’. to more systematic system. It is “faster.
such as Cabinet office. It seems that work frame of central bodies such as MoFEP has fewer problems than certain numbers of MDA. so focus on short-term goals should help to achieve prosperity in mid and low term framework. Midterms and longer-term frameworks in policies are a good thing. Policies should help to set how resources are used rather than just implementing new legislation. Turns to existing sources rather than external endorsements are recommended. 1998). institutional arrangements need to be clear. Moreover. putting technical agendas of DP’S on side and focusing to existent level of human resources. it was also driven and based on strong political imperatives. which is very different from foreign aid “inviting themselves. Secondly. Ghana is often willing to change its systems. updating and improving existing systems rather than changing in alignment with “international best practice” (Peterson. and knowledge. In such collaborations DP should suggest projections on GoG budget timetable rather than their own agendas. Political agenda should be clearly stated on '" " . placing enough emphasis on sequencing and reform roll out scheduling with accomplishing smaller goals seem logically more plausible than exercising passage of big moves with constant fails. Reforms are not only about technical changes. It did not only provide administrative reform.Problems listed above are undoubtedly connected. Firstly. since reconciliation of the retained IGF is still done on yearly bases (Quist et al. To help such processes IGF reports should be used on a shorter-term basis. Political power can be turned into recognition and respect when it comes to budget execution and help persuade good practical performance.” which is often the case. making it more flexible (Peters. 2011) Decentralization in developing countries is challenging as it depends on human resources (Peterson. Government can request support. 2010). decision-making and scrutiny of those decisions. The overall goal is to learn from experience and make longer goals rather than run for successful PEFA reports in order to satisfy DPs and gain more aid. Focus from technicalities should be switched to local problems and specific backgrounds. empowering and strengthening roles of other central bodies. The economy is not resilient. this implies that such vertical centralization can be used to demonstrate political engagement and authority on lower levels. as legislative processes stand well in opposition to actual budget execution. it can engage administrators to help improve policies and guidelines based on real life experience. Ghana depends on DP and foreign aid. such downstream reforms in budget implementation actually lead to the system’s decentralization. 2011). In such circumstances. Modifying and implementing reforms with alignment to existing policies in the local context with longer-term strategies can indirectly impact greater fiscal discipline on different government levels. so as external support weakens Ghana cannot support domestic investments. but defining step by step processes. facilitate discipline. Decentralization is often used to describe Ethiopia's success.
In such surroundings of cross agency and cross-sectorial cooperation. some of the governments realized the benefits of turning to the large number of participants. furthermore corruption.every level. nourishes accountability for PFM reforms. GoG needs to be aware of leadership role importance. moreover stop the repetition of unlisted spending or allegations. Dryden. public procurements and debates in order to conceptualize programs and services. 1998). however. which sets out the strategic framework and trade-offs behind the proposed sector/MDA expenditure. a key short-term objective for the budget transparency movement is to encourage more systematic publication of budget documents (Betley et al. 2012. and the publication and updating of a medium term debt management strategy (world bank). such close cooperation asks for more transparent inner and external audit to attract professional staff. Efficient internal audit can support administrator’s effectiveness. representing control. ensuring better services on the way. Besides turning to the inner human capital. rather than just centralized bodies might generate greater inputs (Peters. At the end.. Such changes might involve training in relation to performance measurement. People’s engagement in MDAs should be solid ground for financial reforms as those people are responsible for financial expenditure. a combination of such steps might improve cash flow forecasting and cash management. Again. leaving Activity Based Budgeting (ABB). thus better service delivery. Government (The Republic of Ghana. Reporting systems to internal control follows the accounting procedures and indirectly brings personnel to budgeting reforms. control and risk management. 2011) recommendations on linking practice between sectorial policies by creating the Budget Framework Paper. Strong evidence of leadership and good management is more important on every level. dialog and cooperation with all key players. Ministry of Finance. Prioritizing ideas and suggestions with feelings of collaboration. 2011). 2013) shows step forward in Program based budgeting (PBB). Additionally. Modern internal audit should be treated professionally in order to encourage staffs with emerging developments and networking opportunities. And. In addition. Developing a reporting system that can trace the amounts transferred within and amongst the different levels of government should create a wider aspect of potential cost savings and improve accuracy and timing (World Bank. 1997). Managing human resources and knowledge calls for change. this is a result of MDAs management. making sure steps are (" " . System as such does not focus on service delivery. This comprehends World Bank’s (2009. The new approach will allow MDAs to be more strategic in their approach to budget management and make the process of budget preparation easier (Porter et al. making the budgeting more strategic and goal oriented process. 2011). Close cooperation of MDAs with central departments might simplify administration. so roles and responsibilities become extremely important..
could. To support accounting and budget management on lower levels.org. G. The Challenge of Reforming Budgetary Institutions in Developing Countries. as the base for introducing horizontal networking among various institutions. moreover it addressed an improvement of service delivery with emphasis on management of human resources. improving the efficiency of budgetary operations will take time and require actions on several fronts. real life experiences. indeed. Sharing of inner and international experiences helps to build and strengthen a common knowledge base (Betley et al.harvard. E.. thus. Bortei-Dorku Aryeetey. especially with senior management. At the end. efficient and functional internal audits need to be extensively introduced. “as key to services”. 2011.uk/files/odiassets/publications-opinion-files/4325. References Ackah. The recommended consensus is to learn from international experience but finding solutions in Ghana context. To introduce fiscal discipline (and cut over spending) Ghana needs to return to policy creation.com/sites/odi.pdf [Accessed 2 January 2014] Allen. Ministry of finance. 2013) shared the practice of the integrated monitoring system to help with cash management monitoring and control and prevent an accumulation of debts. simultaneous creating stronger systems of accounting (to control spending and performance). make Ghana “shine” in the highly competitive game of economic development. (2009).edu/bitstream/handle/1/4448885/Andrews_HowFar.followed and success is awarded. Andrews. E.control. Available from: http://dash. more importantly .. R. Finding the balance with control and flexibility. Paper 5: Ghana [online]. (2010) How far have public financial management reforms come in Africa? [online]. M. and Aryeetey. generally strong in legal framework but poor in implementation.pdf [Accessed 2 January 2014] )" " . GoG in its joint report (World Bank. C. Available from: http://dev. Conclusion Extensive reports from various authors suggest there are gaps in Ghana’s PFM. International Monetary Fund.. (2009) Global Financial Crisis Discussion Series. The Republic of Ghana. moreover in legislative and local experiences.odiorg.chaptermediadevelopment. 2012).
. M. (2011) Plateaus not Summits: Reforming Public Financial Management in Africa. E. and Pot. 20(1): 111-152 Lee Jr. (2010) Republic of Ghana Public Expenditure and Financial Accountability 2009. Available from: http://www.311 Porter. International Journal of Economic Development Research and Investment.G. 1-2. A. Nigeria and South Africa [online].uneca. London: Overseas Development Institute (ODI). Ochieng. Peer Reviewed Journal. (2011) Budget institutions and fiscal performance in Africa. B.. (2010) Managing the huge expectations of Ghana’s oil and gas discovery. (1998) Managing horizontal government: The politics of co-ordination Public Administration. Kenya. *" " . A. Sida [online]. Journal of African Economies. B..org/countries/ghana/ghana. F. S. E. Economic Commission for Africa (2010) Innovations and Best Practices in Public Sector Reforms: The Case of Civil Service in Ghana. M.pdf [Accessed 3 January 2014] Gollwitzer. G. 31(3): 205213 Peters. Andrews.org/sites/default/files/publications/innovations_in_the_publi c_sector.. June Available from: http://www. I. 76 (2): 295. Final Country Case Study Report. R. Joyce (2013) Public Budgeting Systems. Burlington: Jones and Barlett Learning.Betley.pdf Broni-Bediako. C. De Renzio. J. 14(4): 369-394 Quist. Public Administration and Development. International Public Management Journal. Ganguli.. D. & Addei. P. Managing public finance and procurement in fragile and conflicted settings.. A. C (1997) Public expenditure: effective management and control. (2009) Taking Stock: What do PEFA Assessments tell us about PFM systems across countries?. Dryden. (2012) Evaluation of Public Financial Management Reform in Ghana. Betley. London: Institute for Public Policy Research. Peterson. Bird... Rotterdam: Ecorys. (2011). M. and Ghartey.. D. and Wescott. Johnson. R. 2001–2010.oecd. Smith. S. Turkewitz. M. A.
gh/sites/default/files/pbb/PBB%20Guidelines%20for%2 02014%20Budget.bbc.org/handle/10986/2833 [Accessed 28 December 2013] The BBC (2007) Ghana 'will be an African tiger'. Ministry of Finance (2013) Programme based budgeting guidelines concept and specification [online]. BBC [online]. Monday 10th January Available from: https://openknowledge.Joint Review of Public Expenditure and Financial Management. A contemporary approach to public expenditure management. A.1. Tuesday 19th June Available from: http://news.gov. (1998). Vol.mofep. Washington.co.stm [Accessed 23 December 2013] The Republic of Ghana. World Bank (2011) Ghana . World Bank [online].uk/1/hi/world/africa/6766527. Available from: http://www. Public expenditure review (PER).worldbank. World Bank (2009) Ghana .pdf [Accessed 30 December 2013] " " ! ! !+" " .Schick. World Bank Institute. DC: World Bank.2009 external review of public expenditures and financial management.
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