Low credibility and unreliability of budget hampering economic growth – Dr Fiador

Low credibility and unreliability of budget hampering economic growth - Dr Fiador

A Senior Lecturer at the University of Ghana Business School, Dr. Vera Fiador, has said the continuous decline in credibility and reliability of the nation’s budget over the years – as indicated by Public Expenditure and Financial Accountability (PEFA) Performance Assessment Reports (2006-2018) – is not only worrying but also hampering economic growth.

She said a review of the PEFA Performance Assessment Reports from 2006 to 2018 showed that since 2006 there has been a continuous mismatch between what is budgeted and what expenses are made at the end of the year; a situation that greatly affects the credibility and reliability of budgets drawn by successive governments.

According to her, the decline in credibility and reliability means that various governments start with one framework and end up on another – which implies that the country’s planning framework is weak and cannot be relied on. This means that planned activities connected to long-term economic growth are sacrificed for instant relief.

Dr. Fiador said this at a roundtable discussion organised by the Economic Governance Platform (EGP) on the theme ‘Review of Ghana’s Public Expenditure and Financial Accountability (PEFA) Performance Assessment Reports (2006-2018) to draw lessons for Strategic Allocation of Resources and Efficiency of Service Delivery’.

She said, sometimes, consolidated expenditures of successive governments Ghana has had appeared to be on track – but a break-down of the expenditures in terms of unit showed that there were very serious disparities between the planed expenditure and actual expenses. For instance, she said, when the country planned to spend more in the education sub-sector by end of the budget period, it ends up spending more in sports and other sub-sectors that had not been planned for.

She added that there has also been the same issue of disparity between the expected revenue and actual revenue since Ghana gained Middle-Income status – with actual revenue falling way below the expected revenue due to a reduction in donor support.

On external scrutiny and audit of Ghana’s budgets, she said over the period external audit had improved with over 95% of government expenditure being audited; however, legislative scrutiny of these audits as mandated by the constitution was weak.

“This is on account of the backlog of audit reports from previous years; and so by the time they would be dealing with a particular season, the intel they get on it would be no longer useful. The time had literally passed – hence, they were viewing reports that were much older so insights gotten were no longer useful,” she added

She said aside from the issues of credibility and legislative scrutiny for budget audits, there are other systemic issues in the Public Financial Management (PFM) system of Ghana: including the lack of timeliness of budgets; low capacities of people providing information for the budget or those implementing it; poor information flow and difficulty in accessing information.

She added that there were also challenges mapping some revenues expended to government expenditures; and also showing whether revenues were used for their intended expenditure, as well as the effectiveness of these implementations.

She said the next step will be for the EFP to engage the Ministry of Finance (MoF) and Controller and Accountant-General’s Department (CAGD) to find out the number of changes reported in the assessment report that had already been addressed between 2019 and now, and outstanding issues. She noted that the final step will be to work with MoF and CAGD to find solutions to the remaining challenges so as to improve the PFM system of Ghana and better Ghanaians’ livelihood.

In a remark, Director of the Public Financial Management Reform Project at MoF, Dr. Mohammed Sani Abdulai, said Ghana has had some successful reforms in its PFM system over the years.

According to him, together with its development partners, including the World Bank, government has over the years worked to address challenges in the PFM system in order to improve it. He however noted that reform is not an event but a process, and that Ghana has made gains in improving its PFM system and is moving toward consolidation and sustainability of the gains made.

Dr. Sani said most of the challenges in the PFM of system of Ghana cited in the PEFA Performance Assessment Report 2018 have been resolved to some extent; adding that the World Bank has even provided funding of about US$200million to address some of the issues stated in the 2018 PEFA report. He hinted that a similar forum will be organised to show the challenges that were cited in the 2018 PEFA report and had been resolved by government.



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