Common Fund boosted by GHc 400 million

Parliament has given approval for the total allocation to the District Assemblies Common Fund (DACF) to be increased by an additional GHc400 million to GHc2billion, on the expectation that the state will collect more revenue this year than ever before.

This came to light when Parliament approved the Proposed Formula for sharing the District Assemblies Common Fund for this year.

According to a report of Parliament’s Committee of the Whole on the Proposed Formula for sharing the District Assemblies Common Fund, as at now 7.5 percent of Ghana’s total tax revenue is allocated to the district’s Common Fund.

The increment of the Common Fund’s allocation is expected to boost the development agenda at the local level. However, the Parliamentary report claims government already owes the district assemblies statutory fund a chunk of money, as the Fund remains in arrears with respect to the last quarter of 2014.

Nonetheless, the Administrator stated that they have received assurance from the Finance Ministry that arrears will be cleared between June and July this year.

In order to stimulate checks on the effective utilisation of budgetary allocations to MMDAs, the 2016 Formula introduced Budget Implementation Status as an additional sub-factor to existing revenue generation under the Responsiveness Factor.

By provisions of the Act, the Fund’s Administrator is to propose a formula for sharing the Common Fund annually, for the consideration and approval of Parliament.

According to the report, in developing the Formula the ‘Basic Needs’ approach to development was adopted, and considered with indicators such as health service, education service, water coverage and tarred roads coverage as the main determinants in allocating resources to the district assemblies.

As a result, districts with more facilities get less in order to bridge the development gap between the MMDAs.

Additionally, the Formula also takes into account other factors including responsiveness, service pressure, equality and reserves.

The remainder of the Fund is applied to the Formula for equitable distribution in 2016, the report indicated.

The Administrator explained to Parliament that a greater number of districts will receive higher allocations compared to others.

The Committee further observed that the allocation to priority intervention programmes such as the School Feeding programme, has been increased from GHc467,000 in 2015 to GHc776,200 this year.

Other highlights in the report suggested that the Reserve Fund also increased, from GHc160,938 to GHc205,384 -- representing an increase of about 28 percent.