Government to switch to new budget system in 2014

Government is reforming the budgetary scheme, moving from the previous activity-based regime to a programme-based fiscal system to ensure efficiency, accountability and performance in the management of resources.

Thus, the schematics for the 2014 budget statement and onwards, will deviate from the known structure of the current budgeting system that undermines government’s ability to be strategic in its service delivery.

This was disclosed in Accra on Monday at a day’s workshop organised by the Finance Ministry to sensitise Members of Parliament on the introduction and implementation of the new budget system to be otherwise known as the Programme Based Budget.

The Ministry acquiesced that the former budgeting system that was introduced in 1998 was overly detailed, cumbersome to prepare, lacked flexibility and was too centralised for implementation and limited performance measuring.

The 2014 Budget and Economic Statement would be delivered to Parliament next week.

Finance Minister Seth Terpker told the Legislators that the new system, which software cost $1.7 million would streamline the policy choices of competing needs and focus on the results of expenditure decisions.

He explained that the new system would be hinged on policy-based programmes that would be aligned to clearly defined objectives for the services or activities that Ministries, Departments and Agencies (MDAs) are statutorily required to provide.

Mr Terkper said the arrangement would engender shorter, clearer, coherent and concise MDA programme budgets and facilitate strategic in-year re-prioritisation.

He said the new system would bring clarity on government policies, ensure fiscal discipline, lower the country’s debt, improve efficiency and effectiveness of public spending, as well as enhance the quality of goods and services produced by the public sector.

However the budget reforms will come with accompanying reforms, most importantly, improving the credibility of budget ceilings for MDA’s and greater delegation of the management of those budgets and strengthening of expenditure controls by public institutions.

Thus MDA’s will be accountable for the expected results of their budgets.

Major Mahama Samuel Tara (Rtd), Chief Director at the Finance Ministry said the new regime is based on provision of the 1992 Constitution, which provided that budget should be prepared on the basis of either activity or programmes.

He also explained that the old budgetary system aggregated too many activities in the budget estimates that made its management very difficult.

Under the activity-based budget, MDA’s had to call at the finance ministry to pursue the release of funds for all activities and any requirement had to be approved.

This, he said made the ministry too controlling, making the budgetary processes cumbersome, inefficient and virtually impossible to monitor.

The budget strategy for all public funds will be set within an overall medium term policy context, with broad programme basis for MDA budgets covering all mandated services and all sources of funds.