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THE THIRD ANNUAL BUDGET REFORM SEMINAR CHALLENGING THE BUDGET –

THE THIRD ANNUAL BUDGET REFORM SEMINAR CHALLENGING THE BUDGET – TOOLS FOR CHALLENGING THE BUDGET, THE GHANA EXPERIENCE PRESENTATION BY GHANA HELD ON 28-30 NOVEMBER, 2006 ADDIS ABABA ETHIOPIA. THE FOLLOWING AREAS WILL BE COVERED Introduction Budget Timetable

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THE THIRD ANNUAL BUDGET REFORM SEMINAR CHALLENGING THE BUDGET –

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  1. THE THIRD ANNUAL BUDGET REFORM SEMINAR CHALLENGING THE BUDGET – TOOLS FOR CHALLENGING THE BUDGET, THE GHANA EXPERIENCE PRESENTATION BY GHANA HELD ON 28-30 NOVEMBER, 2006 ADDIS ABABA ETHIOPIA.

  2. THE FOLLOWING AREAS WILL BE COVERED • Introduction • Budget Timetable • Tools for Challenging the Budget • Challenges • Looking forward

  3. INTRODUCTION • BACKGROUND TO THE ADOPTION OF THE CURRENT BUDGET PROCESS • Ghana’s budgeting process is based on the Medium Term Expenditure Framework (MTEF). • This was first adopted in 1999 to address weaknesses in the budget preparation process as a part of the general reforms refered to as Public Financial Management System Reform Programme (PUFMARP). • The objective of PUFMARP is to enhance efficiency, accountability and transparency in Government’s PFM .

  4. INTRODUCTION-CONTD. • The Ghana budgeting process MTEF, defined as a multiyear, integrated, broad-based and performance budgeting process. • Multiyear - this is a departure from the previous annual budgeting to a three (3) year rolling budget. • Integrated - the process integrates both Development (Capital) and Recurrent Expenditures. • Broad-Based - this involves the inclusion of GOG, Donor and Internally-Generated Funds (I.G.F.) and • Performance-Based - the process is based on agreed levels of performance or deliverables, as spelt out in the MDA Strategic Plans.

  5. Budget Timetable 1.The budget preparation timetable is shown below and it sets out the steps and timing of activities for the preparation of the MTEF Budget 2. Various tools for challenging the budget are also identified in this workplan

  6. BUDGET DIVISION: WORKPLAN FOR 2006 ANNEX I

  7. These tools that are identified in the workplan are found at four levels: MDAs MOFEP Cabinet Parliament

  8. Submission of previous year’s fourth quarter Budget Review to Cabinet- This is to enable Cabinet monitor performance MOFEP therefore reviews the economy, especially revenue and expenditure outturn and submits a report to Cabinet. (Similar quarterly reviews are submitted to Cabinet 15 days after the end of each quarter.)

  9. Preparation and issuance of Budget Guidelines/ceilings • MOFEP issues guidelines based on GPRSII • The guidelines include the following: • Administrative Instructions • New Policy Initiatives and interventions • 3.Budget Ceilings over a three year period broken down into the ff: • Personnel Emoluments • Administration Expenses • Service Expenses • Investment • GOG and Donor funds

  10. HOW CEILINGS ARE SET • MOFEP determines the overall resource envelope based on Government’s fiscal and monetary policies and targets, including those agreed with its lending partners. • In determining the sectorial Ceilings the following considerations are made: • The relative priority of the sectors in terms of Government objectives • Governments role within the sector eg.producer or regulator • The funding requirements for each sector based on agreed objectives and targets eg. Free basic education • Alternative ways of achieving government objective

  11. These proposals are discussed by Cabinet and the final sectoral ceilings, by item, are issued along with the Budget Guidelines by MOFEP. It now becomes the responsibility of MDAs to break down the aggregate allocation to the various cost centres in line with their priorities.

  12. Internal training for MOFEP budget schedule officers on policy review reports • The Budget Development Unit (BDU) of the Budget Division organises training workshops for all schedule officers in the Budget Division with the aim of updating officers on salient things to look out for when analyzing policy review reports. • A similar internal training is organized for workshop facilitators from MOFEP and NDPC after which separate workshop is organized by MOFEP and NDPC for members of MDA Budget Committees.

  13. Workshop for MDAs 1.Workshop on linking the budget to the GPRS 2.Workshop on policy review 3.Workshop on costing

  14. Submission of policy review reports and draft estimates to MOFEP MDAs seek approval from their respective Chief Directors and Political Heads on issues discussed at the workshop and submit outcome of policy review reports to MOFEP. These reports are scrutinized by the BDU and other schedule officers to ensure that MDA policies are linked to the GPRS.

  15. ‘CONTINUED This is followed by submission of draft estimates to MOFEP to allow schedule officers within the Budget Division have the opportunity to cross-check on issues raised in the guidelines as well as inconsistencies in the draft estimates.

  16. Data capturing, examination and preparation of briefs on MDA draft estimates. 1.The submitted draft annual estimates are captured by the Computer Unit of MOFEP . 2.Schedule officers of MOFEP prepare write-ups with focus on outturn of previous year’s expenditure and assessment of how far MDAs have complied with the broad MDA ceilings. 3.MOFEP schedule officer highlights such variances in the pre-budget brief for the attention of the Minister or chairman of the budget hearing. 4.MOFEP officers use ‘budget hearing checklist’ developed by the BDU. MOFEP staff are able to scrutinize MDA submissions to enable in-depth briefs to be submitted to the Minister before the hearings are conducted

  17. ‘CONTINUED Staff of MOFEP having gone through budget hearing checklist developed by the BDU are able to scrutinize MDA submissions to enable in-depth briefs to be submitted to the Minister before the hearings are conducted.

  18. BUDGET HEARINGS 1.The essence of these hearings, among others, are to create a forum for sector Ministries to justify the need for extra budgetary allocations for their programmes. 2.The hearings cover discussions on new policy initiatives, performance and outlook for MDA expenditures and revenue (IGF). 3.Results-oriented or deliverables form a key part of the discussions and may serve as justification for upward adjustment of ceilings or increase in non-tax revenue collection. .

  19. Preparation of Sectoral briefs Schedule officers record proceedings of all the hearings, prepare and submit new policy initiatives and their accompanying budgetary requirements to Cabinet for consideration and possible inclusion in the budget.

  20. Submisssion and examination of inputs for the preparation of the budget statement and economic policy. MDAs submit inputs for the preparation of the Government’s Budget Statement and Economic Policy which covers the macroeconomic performance and outlook of the economy, sectoral performance and outlook and policy initiatives. These are examined by a team of technical staff including the BDU

  21. Collating and Channeling Public Inputs MOFEP has also instituted measures through advertisement in the national dailies for collating and channeling public inputs into the national budge. All contributors are acknowledged in the Budget Statement Booklet

  22. Submission of draFt budget to Cabinet and finalisation of the budget statement and economic policy MOFEP submits a statement on revenues and expenditures to Cabinet for final qpproval. At this time, the budget statement would be finalized.

  23. Submission and presentation of Budget Statement and draft Annual Estimates to Parliament. The Minister lays the annual estimates and budget statement to parliament

  24. Debate on economic policy and draft estimates and approval of appropriation bill by Parliament Parliament initiates debate on the budget after which the House breaks into the various Select Committees. Parliament draws up a time –table to invite MDAs to examine and discuss their budgets. Based on such discussions Parliament may recommend an increase or decrese in the allocation of a Department or Agency (cost centre) within a Ministry. However, it does not have the constitutional power to increase the total ceiling of an MDA but may recommend future allocation of resources for the sector MDA.

  25. Continued The Select Committees present their reports on the floor of the House and lays a motion for the approval of the various MDA budgets. The reports are collated into draft Appropriation Bill and presented for further debate and subsequently passed as the Appropriation Bill.

  26. Challenges The MTEF budgeting process is time consuming. Because the activities are too many, it has impeded the implementation of the Budget and Public Expenditures Management System (BPEMS) which can only cater for fewer activities. The BPEMS therefore seeks the standardisation of activities before it can be fully implemented.

  27. The Way Forward -BDU to review the MTEF process. -Standardisation of activities on course

  28. THANK YOU

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