Public Financial Management in Ghana: A Move beyond Reforms to Consolidation and Sustainability

Authors: Mohammed Sani Abdulai

Abstract:

Ghana’s Public Financial Management reforms have been going on for some two decades now (1997/98 to 2017/18). Given this long period of reforms, Ghana in 2019 is putting together both a Public Financial Management (PFM) strategy and a Ghana Integrated Financial Management Information System (GIFMIS) strategy for the next 5-years (2020-2024). The primary aim of these dual strategies is assisting the country in moving beyond reforms to consolidation and sustainability. In this paper we, first, examined the evolution of Ghana’s PFM reforms. We, secondly, reviewed the legal and institutional reforms undertaken to strengthen the country’s key PFM institutions. Thirdly, we summarized the strengths and weaknesses identified by the 2018 Public Expenditure and Financial Accountability (PEFA) assessment of Ghana’s PFM system relating to its macro-fiscal framework, budget preparation and approval, budget execution, accounting and fiscal reporting as well as external scrutiny and audit. We, finally, considered what the country should be doing to achieve its intended goal of PFM consolidation and sustainability. Using a qualitative method of review and analysis of existing documents, we, through this paper, brought to the fore the lessons that could be learnt by other developing countries from Ghana’s PFM reforms experiences. These lessons included the need to: (a) undergird any PFM reform with a comprehensive PFM reform strategy; (b) undertake a legal and institutional reforms of the key PFM institutions; (c) assess the strengths and weaknesses of those reforms using PFM performance evaluation tools such as PEFA framework; and (d) move beyond reforms to consolidation and sustainability.

Keywords: Public financial management, public expenditure and financial accountability (PEFA), reforms, consolidation, sustainability.

References:

[1] M. Cangiano, T. Curristine, and M. Lazare, “Forward”, Public financial management and its emerging architecture, Washington, D.C. IMF, 2013, p. VII.
[2] R. Allen, R. Hemming, & B.H., Potter “Introduction: The meaning, content and objectives of public financial management”, in The International Handbook of Public Financial Management, Palgrave Macmillan, London, 2013, pp. 1-12.
[3] PEFA (2016). Framework for assessing public financial management. Available at https://pefa.org/sites/default/files/PEFA%20Framework_English.pdf accessed on May 31, 2019
[4] C. Dener, J. Watkins, and W. L. Dorotinsky, Financial management information systems: 25 years of World Bank experience on what works and what doesn’t. Washington, DC: The World Bank, 2011, p. 52
[5] M. Betley, A. Bird, and A. Ghartey, “Evaluation of public financial management reform in Ghana, 2001–2010”, Final Country Case Study Report, Joint Evaluation, (2012), p. 27, available at https://www.oecd.org/derec/afdb/ghana.pdf accessed on May 31, 2019
[6] World Bank, Project performance assessment report: Republic of Ghana eGhana Project, Report No. 108359, 2016), available at https://ieg.worldbankgroup.org/sites/default/files/Data/reports/ppar_ghana_01032017_0.pdf accessed on May 31, 2019
[7] World Bank, Public Financial Management Reform Project, Project Appraisal Document, (2015) Available at http://documents.worldbank.org/curated/en/516451516628028345/pdf/Disclosable-Version-of-the-ISR-Ghana-Public-Financial-Management-Reform-Project-P151447-Sequence-No-06.pdf
[8] G. A. Bowen, ‘Document analysis as a qualitative research method”, Qualitative research journal, 9(2), (2009), pp. 27-40.
[9] IMF Fiscal Affairs Department, Ghana Towards an Integrated Public Financial Management Legal Framework, 2015, p. 10
[10] J. Diamond, “Good practice note on sequencing PFM reforms”, 2013, available at https://blog-pfm.imf.org/files/sequencing-v8-good_practice_note_on_sequencing_pfm_reforms_jack_diamond__january_2013_1.pdf accessed on May 31, 2019, p. 21.
[11] Ghana 2018 PEFA Report, available at https://pefa.org/node/351 accessed on May 31, 2019.
[12] S., Schiavo-Campo, Chapter 2: “The budgeting and its coverage” in Public Sector Governance and Accountability Series: Budgeting and Budgetary Institutions edited by Anwar Shah 2007, available at https://siteresources.worldbank.org/PSGLP/.../BudgetingandBudgetaryInstitutions.pdf accessed on May 31, 2019, p. 252
[13] D. Tommasi, “Budget Execution” in Anwar Shah (ed.) Budgeting and Budgetary Institutions, Washington, DC: The World Bank 2007
[14] PEFA, “PEFA Handbook Volume IV: Using PEFA to support Public Financial Management improvement”, 2nd Draft, June 2019