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Ghana

Fiscal Transparency and Accountability (GH0023)

Overview

At-a-Glance

Action Plan: Ghana Action Plan 2017-2019

Action Plan Cycle: 2017

Status: Inactive

Institutions

Lead Institution: Ministry of Finance and Office of the President

Support Institution(s): CBA Ghana, IEA, Centre for Democratic Development andSEND Ghana.

Policy Areas

Fiscal Openness, Legislation & Regulation, Oversight of Budget/Fiscal Policies, Public Participation, Publication of Budget/Fiscal Information

IRM Review

IRM Report: Ghana Implementation Report 2017-2019, Ghana Design Report 2017-2019

Starred: No

Early Results: Marginal

Design i

Verifiable: Yes

Relevant to OGP Values: Access to Information , Civic Participation

Potential Impact:

Implementation i

Completion:

Description

What is the public problem that the commitment will address?: There has been the tendency for successive governments to overspend and over borrow money, therefore creating imbalance in the management of the economy. There is the need to manage public expenditure to avoid budget overruns especially in a manner that endangers national fiscal stability. Gradually, it is becoming incumbent on government to set limits for budget deficits and government borrowing.; What is the commitment?: The commitment will ensure the government makes available to the public information on fiscal deficits, government’s borrowing and debt management; establish an independent body to advice government on issues of fiscal responsibility; and, improve reporting on budget implementation by incorporating non-financial information.; How will the commitment contribute to solve the public problem?: The commitment will enable citizens to know how the national debt is being managed. An independent body (a Fiscal Council) can advise government on issues of fiscal responsibility. Citizens will not only have access to financial information on budget implementation but also non-financial information. By having detailed information on budget implementation, citizens can engage meaningfully on issues regarding budgets.; Why is this commitment relevant to OGP values?: By providing key information on budget implementation, this commitment will help improve quality of the information disclosed as well as creating opportunities for the public to influence fiscal policy decisions.

IRM Midterm Status Summary

4. Fiscal Transparency and Accountability

Language of the commitment as it appears in the action plan:

‘There has been the tendency for successive governments to overspend and over borrow money, therefore creating imbalance in the management of the economy. There is the need to manage public expenditure to avoid budget overruns especially in a manner that endangers national fiscal stability. Gradually, it is becoming incumbent on government to set limits for budget deficits and government borrowing. The government commits to be accountable by frequently making available to the public information on fiscal deficits, government’s borrowing and debt management. This will enable the public to know how the debt situation is being addressed and also enable civil society to engage meaningfully with government on issues of debt management. The government will also establish an independent body to advice government on issues of fiscal responsibility. The government also commits to improve reporting on budget implementation by incorporating non-financial information for citizens to know the extent of budget implementation.’

Milestones/Activities:

  • MoF to develop regulations for the new Public Financial Management (PFM) Act by August 2018;
  • MoF to facilitate the building of national consensus on the need to amend the new PFM Act to set limits for budget deficits and government borrowing by August 2018;
  • The Executive to establish Independent Fiscal Council by September 2018;
  • MoF to publish pre-budget statements by September 2018;
  • MoF to amend the new PFM Act to strengthen the fiscal responsibility provision (setting limits for budget deficits and government borrowing) in the Act by December 2018; and,MoF to incorporate non-financial information in budget implementation reporting by November 2018

Start Date: November 2017

End Date: December 2018

Action plan is available in this link

Commitment Overview

Verifiability

OGP Value Relevance (as written)

Potential Impact

Completion

Did It Open Government?

Not specific enough to be verifiable

Specific enough to be verifiable

Access to Information

Civic Participation

Public Accountability

Technology & Innovation for Transparency & Accountability

None

Minor

Moderate

Transformative

Not Started

Limited

Substantial

Completed

Worsened

Did Not Change

Marginal

Major

Outstanding

4. Overall

Assessed at the end of action plan cycle.

Assessed at the end of action plan cycle.

Context and Objectives

This commitment aims to promote fiscal responsibility and access to information in the management of public revenues, mainly within the framework of the Public Financial Management Act, 2016 (Act 921).

Since it recorded its first negative budget balance in 1959 (two years after independence), Ghana has experienced recurrent high deficits with consequent negative effects on its economic growth due to excessive and off-budget government spending that spikes in election years. [28] Other weaknesses identified in a 1990 review of pubic financial management systems include insufficiently robust accounting and monitoring systems; inadequate information flows between key actors like the Bank of Ghana, Ministry of Finance, and the Controller and Accountant General’s Department; a lack of quality and timely data on government resources; and an outmoded regulatory framework. [29] This has led to macroeconomic instability as evidenced by, to cite one measure, increasing public debt as a percentage of GDP; this rose from 25.4 percent in 2006 to 73.4 percent in 2016, albeit in a non-linear pattern. [30] It has also led the government’s seeking repeated emergency assistance from the International Monetary Fund (IMF), compelling the application of strict austerity measures with varying effects on the welfare of the ordinary Ghanaian. [31] The discovery of oil in increasingly larger commercial quantities since 2006 has not helped and may have worsened fiscal indiscipline in the country. Prior to the passage of the Public Financial Management Act (PFMA Act 921), the legal framework governing public financial management was neither centralized nor integrated. [32] The lack of caps for public spending, skepticism around the budget process due to unpredictability of spending, among other factors, had presented some challenges that undermined public finance in the country. [33] However, Ghana has lacked a fiscal council that serves as a regulating force and international institutions such as the IMF have played that role. [34]

Successive governments have tried to remedy this situation in past years through public financial management reforms in the areas of budget, accounting and finance, payroll, fiscal decentralization, and reviews of financial laws. In August 2016, Ghana’s parliament passed the PFMA in a bid to provide cohesive fiscal policy guidance, strengthen public financial management, promote fiscal discipline, and promote transparency and accountability in the use of public funds. [35] The chief object of the PFMA is to regulate the financial management of the public sector within a macroeconomic and fiscal framework.” [36] This is the basis of this commitment that is carried over from the NAP 2015–2017.

This commitment seeks to address the problem of fiscal imbalances by creating a specialized agency to ensure that government’s spending and borrowing do not lead to fiscal deficits. The commitment aims to preserve macroeconomic stability by modifying regulations governing financial management in the country to allow the entry into force of the Public Financial Management (PFMA), by encouraging a national consensus on the appropriate levels of public expenditures and by making budget information available to the public.

This commitment is relevant to the OGP values of access to information and civic participation. The commitment contributes to greater access to information by publishing pre-budget statements and incorporating nonfinancial information in budget implementation reporting, which aims to improve reporting to citizens and civil society on budgetary processes. The commitment is also relevant to civic participation. Plans to build national consensus on amending the PFMA to set limits for budget deficits and government borrowing are, in the researcher’s opinion, a potentially useful way to enhance civic participation in the public financial management reform process. It is worth noting that this will be possible only if the government involves diverse citizen groups from across the country and at all levels of government and meaningfully incorporates their views into the final decision.

While the commitment’s milestones aim at disclosing information, reforming legislation, and creating a special agency to advise on macroeconomic stability in public finance expenditures, there is no specific mention as to how public officials responsible for public finances will be held accountable before the law.

As written, this commitment is for the most part verifiable. Verifiability can be assessed by seeing whether regulations for the Public Financial Management were approved. The development of regulations is vital and easily verifiable; verifiability can be assessed by looking at whether the Independent Fiscal Council was created and if reports with budget information were released. It is worth noting that Milestone II (national consensus) is a bit hard to measure given the lack of specificity in its formulation. This commitment is verifiable as a whole. However, vague language and a lack of context are likely to make specific activities difficult to assess. For example, it is not clear what “facilitate the building of consensus” means or how the Ministry of Finance intends to approach this.

If implemented as written, this commitment will contribute to solving the problem of fiscal imbalances and tax evasion, although not to a full extent. Therefore, the potential impact of this commitment is coded as “moderate.” Though the commitment as written does not specify what it will achieve, the economic analysts and expert civil society organizations such as the Institute for Economic Analysis expect that the regulations would address issues like the lack (in the PFMA) of quantitative limits on debts, deficits, and spending and the absence of a monitoring and enforcement framework to ensure that the government respects the PFMA in ways that enhance fiscal performance. [37] The PFMA lays out that local governments will have limits in budget spending and borrowing and are required to consult with the Ministry of Finance in order to respect time-bound borrowing and spending plans. [38] Although the regulations seek to enforce the implementation of the PFMA, they may still face challenges. According to Mahamudu Bawumia (former deputy governor of the Bank of Ghana), the PFAM as written fails to provide an institutional framework to ensure the provision of fiscal information with quality standards to the public; in his view, no specific accountability tool shows how civil servants will be held accountable when implementing fiscal policies. [39]

Although this commitment aims to enhance regulatory frameworks by establishing ancillary laws and institutions to help prevent public financial mismanagement through monitoring and greater citizen involvement, information by itself does not guarantee access or comprehension to audiences that are distanced by location (i.e., live outside the capital Accra), language (government business is mainly in English), or lack of expertise in public financial management. In addition, the commitment as written stops short of indicating what this information should contain; how, where, and how often the information will be published, and in what ways the Ghanaian public can engage the actors responsible for financial management beyond being the passive recipients of relevant information. Nevertheless, the establishment of rules that allow for implementation of the PFMA, in addition with the council, are signs of positive improvements in stabilizing public finance in the country.

Next steps

  • This commitment covers an important area for the country, in terms of open government and civic engagement. Therefore, it is recommended to carry this forward in the next action plan, with some improvements in commitment design. For example, it is important to include more details and specific activities/milestones as to how public officials will be held accountable as they implement fiscal policies. Also, providing specific information on how information (prebudget statements and other documentation) will be made accessible to the public remains essential.
  • Going forward, the NAP could be less ambiguous by setting measurable targets within its milestones to facilitate evaluation.
  • The government could also incorporate in the amendment process provisions that identify an institution or set of institutions that are primarily responsible for implementing or overseeing implementation of the PFMA. It should provide an independent selection mechanism to ensure that there is no political interference in the implementation of the PFMA.
  • Working with civil society organizations with financial public management expertise, the government should specify what format its information will take to maximize citizen access and identify opportunities for greater civic participation and how diverse citizen groups across the country can use the information it plans to provide to engage relevant issues on a continuous basis. To complement these actions, it is important to specifically highlight/describe how civic engagement activities (for instance the national consensus) will be carried out: the means, outreach, and communication strategies, and so on.

[28] Eric Osei-Assibey, 2018, ‘Making Fiscal Council work for Ghana: Country experiences and best practice’, Policy Analysis, Vol. 1 No. 1, Institute of Economic Affairs, page 2, http://ieagh.org/wp-content/uploads/2019/03/Fiscal-Council-Paper-Revised2-3.pdf; also Samuel Bekoe, Ghana Oil and Gas for Inclusive Grwoth, presentation at the CSO technical meeting on the Fiscal Responsibility Law, Accra, 11 April 2019.
[29] Robert Darko Osei and Henry Telli, 2017, ‘Sixty Years of Fiscal Policy in Ghana: Outcomes and Lessons’, in Ernest Aryeetey and Ravi Kanbur (eds), The Economy of Ghana Sixty Years after Independence, Oxford Scholarship Online. See also Grace Adzroe, ‘An overview of PFM reforms in Ghana’, presentation at the IFAC roundtable discussion on International Public Sector Accounting Standards, Labadi Beach Hotel, 21-22 May 2015.
[30] Debt-to-GDP rose from 36.1 percent in 2009 to 46.3 in 2010. It dropped slightly to 42.6 in 2011 before rising gradually through 2012 to 57.2 in 2013 and a high of 70.2 in 2014. Source: https://tradingeconomics.com/ghana/government-debt-to-gdp; also Osei-Assibey, op. cit. supra, page 2.
[31] Aisha Adam and Nafi Chinery, ‘New legislation will bolster Ghana’s revenue management. Her are four more ways to improve publiv oversight’, 12 February 2019, https://resourcegovernance.org/blog/new-legislation-will-bolster-ghana-revenue-management-here-are-four-more-ways-improve-public; Osei-Assibey, op. cit. supra, page 2.
[32] “Public Financial Management Bill passed into Law” Ghana Justice, 8 August 2016, https://www.ghanajustice.com/2016/08/public-financial-management-bill-passed-into-law/
[33] Ibid.
[34] “ Press Release On The Formation Of The Fiscal Council And Financial Stability Council” IMANI, Center for Policy and Education, 16 January 2019, https://imaniafrica.org/2019/01/16/press-release-on-the-formation-of-the-fiscal-council-and-financial-stability-council/
[35] Report of the controller and accountant-general on the public accounts of the consolidated fund for the year ended 31 December 2016, http://www.cagd.gov.gh/portal/files/public_accounts/REPORT_OF_THE_CONTROLLER_AND_ACCOUNTANT_Published.pdf
[36] Government of Ghana, Public Financial Management Act, 2016 (Act 921). https://www.mofep.gov.gh/sites/default/files/reports/economic/PUBLIC%20FINANCIAL%20MANAGT.%20%20ACT%2C%202016.pdf, Article 1(1).
[37] Osei-Assibey, op. cit. supra, page 2.
[38] “Ghana’s public financial management act to accelerate subnational action on LEDS”, LEDS, 10 January 2018, http://ledsgp.org/2018/01/ghanas-public-financial-management-act-subnational-action/?loclang=en_gb
[39] Ibid.
X

IRM End of Term Status Summary

4. Fiscal Transparency and Accountability

Commitment text: There has been the tendency for successive governments to overspend and over borrow money, therefore creating imbalance in the management of the economy. There is the need to manage public expenditure to avoid budget overruns especially in a manner that endangers national fiscal stability. Gradually, it is becoming incumbent on government to set limits for budget deficits and government borrowing. The government commits to be accountable by frequently making available to the public information on fiscal deficits, government’s borrowing and debt management. This will enable the public to know how the debt situation is being addressed and also enable civil society to engage meaningfully with government on issues of debt management. The government will also establish an independent body to advice government on issues of fiscal responsibility. The government also commits to improve reporting on budget implementation by incorporating non- financial information for citizens to know the extent of budget implementation.

Milestones/Activities:

  • MoF to develop regulations for the new Public Financial Management (PFM) Act by August 2018;
  • MoF to facilitate the building of national consensus on the need to amend the new PFM Act to set limits for budget deficits and government borrowing by August 2018;
  • The Executive to establish Independent Fiscal Council by September 2018;
  • MoF to publish pre-budget statements by September 2018;
  • MoF to amend the new PFM Act to strengthen the fiscal responsibility provision (setting limits for budget deficits and government borrowing) in the Act by December 2018; and MoF to incorporate non-financial information in budget implementation reporting by November 2018

Editorial Note: For the full text of Ghana's 2017-2019 Action Plan please see: https://www.opengovpartnership.org/documents/ghana-action-plan-2017-2019/

IRM Design Report Assessment

IRM Implementation Report Assessment

Verifiable: Yes

Relevant: Yes

o Access to Information

o Civic Participation

Potential impact: Moderate

Completion: Substantial

Did it Open Government? Marginal

This commitment addressed weaknesses in Ghana’s financial management systems, including recurring budget deficits, excessive and off-budget government spending, and inadequate operational and regulatory frameworks. [38] Specifically, the commitment sought to promote fiscal responsibility and access to information in the management of public revenues, mainly within the framework of the Public Financial Management Act (PFMA), 2016 (Act 921). This commitment built on the passage of the latter, an important highlight of Ghana’s 2015−2017 action plan.

This commitment was substantially completed. Parliament passed regulations for the PFMA in March 2019. [39] The MoF collated inputs from government and civil society on proposed amendments to the PFMA. Additionally, President Nana Akufo-Addo inaugurated an Independent Fiscal Council in January 2019. [40]

According to Mr. Robert Ebo Amuah, head of fiscal decentralization at the MoF, the institution has published prebudget statements (“Fiscal Strategy Documents”) on its website since 2017. [41] The 2019 Open Budget Survey, jointly administered by Ghanaian think tank, SEND-Ghana, and the International Budget Partnership, states that Ghana published pre-budget statements in 2017 and 2019, but that these were published late, not published online, or produced for internal use only. [42] This resulted in a low score of 15/100 for public participation in the budget process. [43] Amuah told the IRM researcher that the Fiscal Responsibility Act (FRA), 2018 (Act 982), passed December 2018, provides "all the numerical rules" that led to calls to review the PFMA and thus negated the need for amendment. [44] The MoF has included nonfinancial information in its budget performance reports since 2015.

Three Ghanaian CSOs, Imani-Africa, the Natural Resources Governance Institute, and the Ghana Oil and Gas for Inclusive Growth, noted two major obstacles to implementing this commitment. First, the Fiscal Council has no basis in Ghanaian law. Neither the PFMA nor the FRA—two principal laws that regulate public financial management in Ghana—provide for its establishment. [45] This was a new concern that emerged during implementation. These CSOs also raised concerns about the Council’s independence, given that its members are appointed by the president and its tenure is coterminous with that office. [46]

In Ghana’s Design Report, this commitment was coded for access to information and civic participation. The commitment marginally opened government in these respects. The collection and incorporation of input from civil society in amending the PFMA marked a marginal improvement in civic participation. The commitment’s contribution to civic participation would have been greater had the government provided public, reasoned responses to civil society suggestions. This commitment also improved access to information by facilitating the publishing of prebudget statements starting in 2017. However, these were not made available to the public. Therefore, it was no easier in the reporting period for citizens to access information about the budget.

[38] NRGI/GOGIG, “Concept note, Technical session on Ghana’s New Fiscal Responsibility Law” (document shared at the meeting, 2019).
[39] Robert Ebo Amuah (head of fiscal decentralization, MoF), interview by IRM researcher, 1 Jul. 2020; Ministry of Finance, Public Financial Management Regulations 2019 (L.I. 2378), (2019), http://www.mofep.gov.gh/sites/default/files/acts/PFM-Regulations-2019.pdf.
[40] President Akufo-Addo created the Council in January 2019, four months after the OGP target of September 2018 (MOF, “Fiscal, and Financial Stability Councils now Established” (3 Jan. 2019), https://www.mofep.gov.gh/news-and-events/2018-01-03/fiscal-and-financial-stability-councils-now-established).
[41] Amuah, interview.
[42] International Budget Partnership and SEND-Ghana, “Open Budget Survey 2019: Ghana” (2019), https://www.internationalbudget.org/open-budget-survey/country-results/2019/ghana.
[43] Id.
[44] Amuah, interview.
[45] Imani-Africa, “Press Release on the Formation of the Fiscal Council and Financial Stability Council” (16 Jan. 2019), https://imaniafrica.org/2019/01/16/press-release-on-the-formation-of-the-fiscal-council-and-financial-stability-council/; NRGI/GOGIG, “Concept note, Technical session on Ghana’s New Fiscal Responsibility Law.”
[46] NRGI/GOGIG, “Concept note, Technical session on Ghana’s New Fiscal Responsibility Law.”

Commitments

  1. Open Contracting and Contract Monitoring

    GH0020, 2017, Anti-Corruption

  2. Anti-Corruption Transparency

    GH0021, 2017, Anti-Corruption

  3. Beneficial Ownership

    GH0022, 2017, Anti-Corruption

  4. Fiscal Transparency and Accountability

    GH0023, 2017, Fiscal Openness

  5. Extractives Sector Transparency

    GH0024, 2017, Anti-Corruption

  6. Right to Information

    GH0025, 2017, Access to Information

  7. Civic Participation and Accountability

    GH0026, 2017, Fiscal Openness

  8. Technology and Innovation

    GH0027, 2017, Access to Information

  9. Starred commitment Open Contracting

    GH0014, 2015, Anti-Corruption

  10. RTI

    GH0015, 2015, Access to Information

  11. Citizen’S Participation

    GH0016, 2015, Public Participation

  12. Fiscal Openness

    GH0017, 2015, Legislation & Regulation

  13. Starred commitment Revenue Management

    GH0018, 2015, Legislation & Regulation

  14. Open Data

    GH0019, 2015, Access to Information

  15. Fiscal Responsibility

    GH0001, 2013, Fiscal Openness

  16. Fiscal Transparency

    GH0002, 2013, Capacity Building

  17. Right to Information

    GH0003, 2013, Access to Information

  18. Human Rights and Anti-Corruption

    GH0004, 2013, Anti-Corruption

  19. Extractive Sector Revenue Management

    GH0005, 2013, Anti-Corruption

  20. Investment Oversight

    GH0006, 2013, Anti-Corruption

  21. Citizen Participation

    GH0007, 2013, Capacity Building

  22. Code of Conduct Bill

    GH0008, 2013, Anti-Corruption

  23. Audit Reports

    GH0009, 2013, Anti-Corruption

  24. National Broadcasting

    GH0010, 2013, Civic Space

  25. e-Immigration

    GH0011, 2013, Access to Information

  26. Financial Management

    GH0012, 2013, Access to Information

  27. Starred commitment Policy Portal

    GH0013, 2013, Access to Information

Open Government Partnership