The Ministry of Finance in collaboration with the Attorney-General’s Department has organized a sensitization workshop for all heads of entities on Spending Arrears Clearance and Prevention Strategy.
They were also sensitised on the evidentiary requirement for prosecution under the Public Financial Management (PRM Act).
Minister for Finance, Dr Mohammed Amin Adam during the event on Thursday, April 4 charged heads of state entities to back government’s measures to avoid fiscal slippages and extra-budgetary spendings, especially this election year.
At the same event, the Minister outdoored a strategy aimed at clearing existing spending arrears and preventing the future accumulation of arrears by state entities.
Accumulation of arrears, according to him is prevalent in many emerging economies in the world and in African countries south of the Sahara. He observed that the phenomenon has been on the increase in recent years and has become a key economic policy challenge for most African countries.
Minister for Finance has charged heads of covered entities to back government’s measures to avoid fiscal slippages and extra budgetary spendings especially this election year.
Arrears constitute a sizeable portion of public expenditure and this requires reforms to check them. pic.twitter.com/UT6v22ZGHA— Ministry of Finance, Ghana (@MoF_Ghana) April 4, 2024
In Ghana, the finance minister indicated that the accumulation of arrears constitutes a sizeable portion of public expenditure and that certainly requires pressing reforms.
Mr Amin Adam made the observation when he addressed Chief Directors and Heads of Covered Entities attending a sensitization and training workshop on the Spending Arrears Clearance and Prevention Strategy and the evidentiary requirements for prosecution held at the Labadi Beach Hotel on Thursday, 4 April 2024.
“In the Public Financial Management (PFM) Act, 2016, Act 921 and its Regulations as well as the five-year Public Financial Management Strategy: 2022-2026, the government has rightly prioritised and resolved to address this challenge.
“In moving from policy to action, the Government has designed and approved for implementation of a comprehensive strategy – Spending Arrears Clearance and Prevention Strategy – to clear and prevent the accumulation of arrears. This is in direct response to the constant accumulation of arrears, which indicates the challenges associated with effective execution of planned budget operations,” Mohammed Amin Adam said.
“Without doubt, the socio-economic implications of accumulating unsustainable arrears are enormous and far-reaching. It impacts the operations of businesses and enterprises; whether small or big, undermines financial sector performance, raises the cost of doing business for the government, and reinforces the view that more is required to level up with the expectations of sound public finance management. Ultimately, it challenges the effectiveness of fiscal policy and results in poor public service delivery to our citizens” the finance minister added.
Dr Amin Adam further highlighted the measures contained in the approved strategy document to prevent the accumulation of arrears .
He said these “include the enforcement of sanctions under the PFM Act and its Regulations, publication of league tables for compliance with commitment control measures enshrined in the PFM Act, incorporation of clauses of GIFMIS purchase orders in national tender documents, full roll-out of GIFMIS to all Covered Entities outside the system, among others”.
“To ensure that all Covered Entities are abreast with the current Policy directions on the accumulation of arrears and the Strategy as a whole, it is important to sensitise Principal Spending Officers (Chief Directors and Heads of the Covered Entities) and Directors who are responsible for the day-to-day implementation of the National Budget on the contents of the strategy document, especially the measures to prevent the accumulation of further arrears.
“The sensitisation and training workshop seeks to bring to the attention of the Covered Entities Government’s policy to address the weak commitment controls and expenditure management as contained in the Strategy document and train representatives of the Covered Entities on the evidentiary requirements for prosecuting officials who go contrary to the PFM Act, what constitutes breaches in commitment control and how Government intends to conduct the prosecution,” he added.