Operationalization of the Public Financial Management (PFM) Act 2016, is expected to be deferred, following delays that have put the passage of its implementation regulations by Parliament, behind the original schedule.
The implementing regulations, which formed part of the prior action under the International Monetary Fund’s recently ended Extended Credit Facility programme with Ghana, reflect broad consultations among stakeholders, and should have been approved on a lapse-of-time basis by early April.
To strengthen fiscal transparency and accountability, the Ministry of Finance submitted to the Legislative Committee (LC) of Parliament regulations for the 2016 Public Financial Management Act, in line with IMF’s Fiscal Affairs Department (FAD) recommendations.
The Act is to regulate the financial management of the public sector within a macroeconomic and fiscal framework.
Despite strong progress resulting from concerted efforts by government, some other key fiscal reforms have fallen behind schedule as well.
Treasury Single Account
Under the fiscal structural reforms, significant progress have been made although the September benchmark on the Treasury Single Account (TSA) and the end-December benchmarks related to the GIFMIS and HRMIS were not met either.
On the TSA, 176 accounts of ministries, departments, and agencies (MDAs) remained to be transferred. For GIFMIS, all MDAs of the central and local governments are on the system. However, a very small number (4 out of 58) of entities with internally generated funds remain outside GIFMIS.
The HRMIS now covers about 80 percent of the government payroll. The authorities plan to continue extending HRMIS until all MDAs are part of the system.
There are now fears that with the ECF programme now ended, government may not see as much urgency as hitherto to complete the reforms, more so since they aim to further restrict government’s fiscal space ahead of crucial general elections at the end of next year. It has been common practice by incumbent governments to loosen fiscal policy in the run up to general elections in order to woo voters.
Fiscal Structural Reforms
As part of fiscal structural reforms, government in December, enacted fiscal rules and announced the creation of a fiscal council.
The Fiscal Responsibility Act, 2018 (982) establishes two numerical fiscal rules, limiting the overall fiscal deficit on a cash basis to 5 percent of GDP and mandating a positive primary balance.
The rules cover the central and local governments, autonomous agencies, and statutory bodies. The law however allows for suspension of the rules for circumstances of force majeure, severe economic shocks (including commodity price shocks), and periods when the GDP growth rate is one percent or below.
By Joshua W. Amlanu