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Ghana Budget ushers in programme-based PFM reforms

By Judith Ugwumadu | 20 November 2013

Ghana is to increase its emphasis on good public financial management to ensure government spending is efficient and delivers value for money.

Finance minister Seth Terkper said in his budget speech yesterday that Ghana would introduce a system of programme-based budgeting to respond to the challenges identified with the activity-based budgeting system that has been used for the past 15 years. 

The new PBB system would get rid of complex and centralised budget management and shift the focus from inputs and activities to service delivery and results. Terkper said this would add to ‘several ongoing PFM initiatives,’ such as the Ghana Integrated Financial Management Information Systems (GIFMIS), Ghana Revenue Authority modernisation and fiscal decentralisation. 

Terkper said he expected Ghana’s fiscal deficit to decline to 6% over the medium term.

‘To improve efficiency in the delivery of public services, we have for the first time introduce[ed] performance measurement in the budget management pushing our agencies to be more efficient and deliver value for every credit that is spent. 

‘Service improvement indicators have been included in the budget of all Millennium Development Accounts (MDAs) and they will be assessed on that basis through the implementation of programme based budgeting.’

He said that this was a ‘demonstration of our commitment to the principles of good economic governance in terms of transparency and accountability’.

Other fiscal reforms highlighted by Terkper included improvements to revenue mobilisation, an effort being led by the Ghana Revenue Authority under its continuing Revenue Modernisation Program. 

He also said the government would review capital spending and the strategy for financing capital projects. The government would also focus on the completion of pipeline projects to reduce medium-term fiscal risks as well as the refinancing and a tenure extension of debt.

And in 2014, Ghana plans to bring in measures to strengthen local revenue generation under its fiscal decentralisation reforms.

In addition to stabilising the fiscal situation, 2.5% of VAT will go towards Ghana’s ongoing infrastructure and development drive. 

Terkper said: ‘This government has been pursuing accelerated infrastructure development supported by effective public finance management and institutional reforms, to lay the foundation for the next decade of inclusive and shared growth.’

Elsewhere in his Budget statement, Terkper said the president and vice president would take a 10% pay cut in 2014. The amount deducted would be used to boost maternal and neonatal health.

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