Editorial by Ghanaian Times: Embrace measures to avoid budget overruns

Budget overruns constitute one huge public financial management problem in Ghana.

In spite of budgets prepared for various state projects, the problem recurs and is worst in election years when politicians want to complete particular projects to attract votes.

Since overrun occurs when the actual cost of a project exceeds the estimated or budgeted cost, it means that the state is going to pay more than it should be.

However, the problem does not end there, as the overrun can cause further problems with the project’s scope, schedule, quality, or risk management and affect the project’s profitability, stakeholder satisfaction, and competitive advantage, according to studies.

For instance, a few months after their handover, roads hurriedly done in election years begin to develop defects like potholes.

At the end of it all, the unbudgeted funds pumped into the construction of such roads have gone to waste because, in no time, the need to reconstruct them arises.

These and other reasons are why we support the appeal from the Minister-designate for Finance, Dr. Mohammed Amin Adam, to the Chief Directors and Heads of all Ministries, Departments, and Agencies (MDAs) to ensure strict compliance with their stated budgets for this year, a general election year, in order to curtail overruns.

He was magnanimous enough to show the Chief Directors and the other heads how to implement the appeal, and this is very important.

He says it is imperative that they engage their political heads and not commit to projects that have not been budgeted for, no matter which quarter they are coming from.

Going by what the minister-designate is saying, we can conclude that the appeal is part of a government expenditure reform on the way.

This means that when finalised, the reforms are going to be embodied in public expenditure policy, which must be respected by even the President of the country.

All stakeholders working on such reforms and the subsequent policy must, therefore, attach urgency to the process and bring some restrictions to ensure prudent expenditure to save the Consolidated Fund from constant stress.

The Ghanaian Times commends the minister-designate for his concerns, but it seems this step is long overdue.

Public duty bearers, particularly politicians and heads of covered entities, have taken advantage of and exploited the situation for far too long, which has hurt the country’s financial strength.

We do not understand why the incoming minister should count on the Chief Directors and other heads to engage their respective political heads on the government’s policy direction to ensure the effective implementation of the measures at their various entities.

We think the best thing to do is to call the political heads to a meeting and sensitise them to the ramifications of their budget overruns.

If really politicians are providing service to the people without any ulterior motive, as they claim, then here is one occasion to prove their selflessness.

In that case, we also think there is a need to sensitise the public and understand why certain projects must wait until the appropriate time.

And while this is being done, there is a need for the government to check for factors that typically cause budget overruns, such as delays in payment to contractors, project variations, inflation, and schedule slippage.