A new report from the Economic Governance Platform (EGP) has called for reforms to Ghana’s public financial management (PFM) system to avoid overspending and budget overruns that have resulted in huge debts.
The report, titled “Public Expenditure and Financial Accountability Report 2006-2018,” found that financial indiscipline between government agencies and state institutions has led the country to incur debts of several billion cedis. .
The challenge, according to the report, was due to the ineffectiveness of the PFM system in achieving budgetary outcomes of fiscal discipline, strategic resource allocation and efficient service delivery.
The report highlighted that weaknesses persist in the areas of fiscal credibility, predictability and control of budget execution, integrity of government financial information and external oversight, as well as audit, among others.
He recommended that Ghana’s PFM system is not strong and rigorous enough to control and block overspending and misuse of state resources, so it needs to be reviewed and strengthened to protect public funds.
Providing more details on the report at a panel discussion in Accra, Dr Vera Fiador, senior lecturer in the Department of Finance-University of Ghana Business School (UGBS), said there was a need for a definition clear spending. arrears and a systematic and coherent mechanism for monitoring and measuring these expenditure arrears.
It is of the opinion that the risk analysis prepared by the internal audit units should also focus on the risks of non-compliance and on the efficiency and effectiveness of the internal control systems of state agencies.
âThere should be a consolidation of central and subnational fiscal data for the general government sector; thus, both levels should use the same classification systems to avoid delays in informing MMDAs about their allocations, âshe suggested.
Dr Fiador pointed out that many of the challenges related to embezzlement of public funds and overspending can be resolved through timely availability of the Comptroller and Accountant General’s reports to the public.
She added that in the conduct of budget documentation, full information should be provided on the main macroeconomic assumptions underlying the budget estimates: budget deficit analyzes, composition of deficit financing, and detailed stock analysis. domestic and foreign debt, as well as statements of government financial assets.
âThe statement of financial assets must include receivables such as information on the results of the previous year with the estimates of the various MDAs; revised estimates for the current year with estimates from different MDAs, detailed analyzes of spending allocations and revenue implications of new policy proposals, among others, âshe said.
Offset in report
Reacting to a question on the time lag of the report, EGP coordinator Mr. Felix Ankrah said that there is a possibility of lag effects in some cases, the decline in performance and the substantial fiscal risks posed. By many of the indicators are red flags that require further attention before definitive action can be taken.
He explained that the Public Expenditure and Financial Accountability report focuses more on form than function, therefore failing in form without failing in function always scores low.
âIn general, the PEFA framework was not designed to indicate why indicators are poorly rated, but only to suggest general areas that might need more attention in the form of specific diagnoses,â she said. .