THE Public Interest and Accountability Committee (PIAC) has asked the government to ensure that oil revenues allocated for projects through the budget should be sustained in an adequate manner.
This will help in the timely completion of projects that receive funding under the Annual Budget Funding Amount (ABFA) and prevent the extra cost incurred through cost overruns on stalled projects.
A supplementary expenditure analysis to the committee’s 2018 semi-annual report noted that a number of projects had stalled due to funding issues and this was having a toll on the quality and cost of projects.
“Funding to ABFA projects should be sustained in adequate amounts to ensure timely completion. This will help to avoid the huge cost overruns that have been associated with the delay in execution of many ABFA-funded projects, particularly road projects,” the report said.
A number of visits by the committee and journalists to ABFA-funded projects in some part of the country revealed that a number of road and construction projects had stalled due to payments owed the contractors.
Tussle over unspent ABFA
After the release of its 2018 semi-annual report, the PIAC and the Ministry of Finance were engaged in a tussle over the account of an unspent ABFA amount from 2017.
The supplementary report indicated that from 2017, there was an unutilised ABFA of GH¢403.74 million (now GH¢440.84 million due to exchange rate gains), which according to the Ministry of Finance was being held in the Treasury Single Account (TSA), and would be brought forward to 2018.
PIAC, however, explained that the Ministry included the unspent amount in detailing out the programmed expenditure in respect of the GH¢1.55 billion for 2018, it included the GH¢440 million balance from 2017.
“The ministry indeed, confirmed this in a meeting held with PIAC on April 18 at which meeting it explained that because the 2018 budget was presented in September 2017 and Public Interest and Accountability Committee (PIAC), the GH¢403 million had been approved by Parliament for spending in that year, it could not have been included in the 2018 budget for Parliamentary approval,” the report noted.
The ministry, the report noted, confirmed that the GH¢440 million outstanding balance from 2017 was therefore not part of the approved expenditures for 2018 under the Appropriation Act for that year.
The ministry indicated that the unspent amount would need to be brought forward into the 2019 budget for Parliamentary approval (under the 2019 Appropriation Act) before it could be spent.
“Yet in detailing out the programmed expenditure in respect of the GH¢1.55 billion, the ministry included the GH¢440 million balance from 2017. The ministry’s explanation to PIAC and, by extension, to the Ghanaian public is unsatisfactory and misleading, to the extent that it creates the impression that the GH¢440 million unspent amount from 2017 has been duly accounted for,” it noted.
PIAC, therefore, recommends that if as the ministry claims the unspent ABFA amount from 2017 will require Parliamentary approval before being spent, then it should expunge the amount from its programmed expenditure for 2018.
The committee also explained that it remained committed to work with the Ministry of Finance to properly account for the unspent amount and the outcome shall be made public in subsequent reports.
The committee encourages the ministry to ensure that going forward, its programmed and actual expenditure continue to comply with Section 21(4) of the PRMA, which requires 70 per cent expenditure on public investments and 30 per cent on goods and services.
In 2017, the priority areas for utilisation of the ABFA were revised to reflect the Government of Ghana’s medium-term development strategy and policy objectives. The new areas focused on agriculture, Physical Infrastructure and Service Delivery in Education, Physical Infrastructure and Service Delivery in Health, Road, Rail and Other Critical Infrastructure Development.
Programmed allocations of ABFA to the priority areas indicated that an amount of GH¢251.47 million, accounting for 16.31 per cent of total budgeted ABFA, was to be utilised on agriculture, representing a 61.19 per cent increase over the allocation of GH¢156.01 million to the Agriculture priority area in 2017.
An amount of GH¢465.91 million, accounting for 30.23 per cent of total allocation, and representing a 120.06 per cent increase over the respective allocation in 2017 (GH¢211.72 million), was to be utilised on Physical Infrastructure and Service Delivery in Education.
An amount of GH¢50 million, accounting for 3.24 per cent of total allocation, was to be utilised on Physical Infrastructure and Service Delivery in Health. The same amount was programmed for this priority area in 2017.
The remaining amount of GH¢774 million, accounting for 50.05 per cent of total budgeted allocation to ABFA, was programmed for the Road, Rail and Other Critical Infrastructure area in 2018. This represents a 105.51 per cent increase over the respective allocation in 2017 (GH¢376.62 million).
Besides the allocation to the priority areas, an amount of GH¢5 million, representing 0.32 per cent of total allocation to ABFA, was programmed for the purchase of an office building and implementation of the activities of the Public Interest and Accountability Committee (PIAC) for the year. The allocation to PIAC represents a 163.16 per cent increase over the programmed allocation in 2017 (GH¢1.90 million).
Why the delay?
The report noted that the supplementary report was necessary as data for the analysis was submitted three months after the statutory publication date, and so could not be included in the substantive report.
“As indicated in the statement to release the substantive 2018 Semi-annual Report, PIAC on 17 July 2018 made its initial data request to the Minister of Finance, for revenue and expenditure data. The ministry in response provided only the revenue data, leaving out the expenditure component,” it noted.
The report also noted that going forward, PIAC expected timely submission of data by stakeholder institutions to help the committee meet statutory deadlines and avoid the need for supplementary reports.