\PROGRAMME BASED BUDGETING

IN GHANA

8th Annual CABRI Seminar on 8th Annual CABRI Seminar on

Budgeting for Results: Moving Towards

Performance Budgeting, Johannesburg,

South Africa, 9-11 May, 2012

PRESENTATION BY GHANA

Outline� Introduction

� Strengths and weaknesses of Activity Based Budgeting (ABB)

� What is Programme Based Budget ?

� Why Programme Based Budgeting(PBB) in Ghana?

� How different will it be from The current Activity Based Budget?How different will it be from The current Activity Based Budget?

� What is the Implementation Plan?

� Status of Implementation

� Lessons Learnt

� What is the Way Forward

� Conclusion

Introduction� The Activity Based Budgeting (ABB)approach has been in use in Ghana since1998.

� ABB was introduced under the PublicFinancial Management Reform ProgramFinancial Management Reform Program(PUFMARP)

� It was intended to bring a strongerperformance focus to MDAs budgets bylinking strategic objectives to budgetoutputs and activities.

� Various findings from the reviewsundertaken of the ABB process in Ghana.

Strengths of ABB

� Budget coverage increased from GoG to include donor and

IGF budget.

� MDAs prepare management information such as Mission

Statement and Costing of the Activities required to meet the

MDAs objectives MDAs objectives

� Increased Ownership by MDAs of their budget and reduced

the involvement of MoFEP in the details of MDAs budget.

� Improved capacity of MDAs to plan and budget more

strategically for the medium term.

� Helped integrate recurrent and development expenditure

Weakness – Budget Preparation� Determining the exact commitment made by MDAs in the

previous years

� Matching fund requirements for donor funded project and

agreement spanning more than the MTEF

� MDAs spread scope of work and objectives too wide instead

of concentrating on core mission and as such request for

resources over the ceiling provided by MoFEPresources over the ceiling provided by MoFEP

� The MTEF in Ghana uses three year planning horizon, effort

are usually placed on the preparation of the current year

budget with the remaining years being merely indicative

ceiling.

� lack of comprehensiveness in the MTEF. Currently, the MTEF

budgeting is limited only to service and investment expenses

whilst the personnel emoluments and administration expenses

are on line item budgeting.

Weakness – Budget Preparation

Cont’d � The budget process remains incremental and input focused;

� The budget structure does not allow for monitoring budget

implementation against set objectives or performance

indicators.

� There exists limited capacity to cost strategies and lack of� There exists limited capacity to cost strategies and lack of

comprehensive information on budget parameters during

budget formulation

� Weak revenue forecasting and macroeconomic planning

affecting the MTEF process.

� The inability of MOFEP to meet the resource requirement of

MDAs usually affects the implementation of planned activities

and projects.

What is PBB?

� It is a way of preparing the budget

which directly links the planned

expenditures to clearly determinedexpenditures to clearly determined

results and improved service delivery

within the mandate of the

organisation.

Objectives

� To enhance Government's ability to allocate

available resources in accordance with its policy

priorities

� To better demonstrate the strategic intent of the � To better demonstrate the strategic intent of the

Budget

Why PBB in Ghana?

� To respond to challenges with the current Activity Based

Budget system and other emerging issues (oil find etc)

� Improve budget management

� Introduce performance management in the current

budget system

� Improve service delivery

� Improve the medium term expenditure framework

How different will PBB be from The

current ABB

� To respond to challenges with the current ABB system

� Clearer linkage between priorities and planned expenditures of

MDAS

� Less detail (sub-program level appropriation)

� Less emphasis on input and activity in budget documents

� Shift from managing budget inputs and activities and focusing

on results through output and performance indicators

� Flexibility in budget execution

� Making the MDAs more accountable

� More focus on monitoring and evaluation

Benefits of PBB�More clearly document how resource allocation

decisions affect services to the public.

� Facilitates benchmarking for the assessment of

performance (both effectiveness and efficiency)

� Clearer, regarding what Public Servants are

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� Clearer, regarding what Public Servants are

expected to achieve and what resources available

� Clearer and more succinct reporting of the Budget

(to Parliament and to citizens)

Benefits of PBB Cont’d� Facilitates a closer alignment between planning

and allocation of resources.

� Allows Government to better explain the Budget

to Parliament and ordinary citizens.

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� Allows measurement of performance against

targets.

� Empowers Public Service managers to manage

flexibly and innovatively in order to efficiently and

effectively meet client needs.

A Program Hierarchy13

Budget

Program 1

Budget

Program 2

Budget

Program 3

MDA

Budget

Budget

Program 4

Budget

Program 5

Core

Operations

3.2.1

Budget Sub -

Program

3.1

Budget Sub -

Program

3.2

Budget Sub -

Program

3.3

Budget Sub -

Program

3.4

on-going

3.2.2

Initiative

3.2.3

Project

3.2.6

Project

3.2.5

Project

3.2.4

Project

3.2.7

What is the implementation plan

� Phase One – Initial pilot for testing of the new

Guidelines

� Phase two- Pilot Budget preparation for 7 MDAs.

� Phase three- Pilot Budget preparation for all

MDAs

� Phase four- Roll out to all MDAs by 2014 and

MMDAs by 2015.

Status of implementation� Project Secretariat for Budget reforms has been set up at

MoFEP

� Orientation for all MDAs on PBB completed

� Initial pilot involving two MDAs for testing of the new

Guidelines completed.

� Identification and selection of additional five (5) MDAs� Identification and selection of additional five (5) MDAs

for piloting completed. These are: Ministries of Education,

Health, Food and Agriculture, Roads and Highways and

Commission on Human Rights and Administrative Justice.

� Completed training to build capacity of staff of the

seven (7) pilot MDAs

� Production Workshop for the seven PBB pilot MDAs to

prepare their PBB using the ABB has been completed

Lessons learnt� The Ghana Shared Growth and Development Agenda( GSGDA)

provided a sound basis for the development of program outcomes

and therefore for guiding the development of a program Structure.

� MDA medium term strategic plans exist for each of the pilot Ministries

and provide valuable information to assist the development of

program structure and adoption of output indicators.

� The Institutional Structures of Government and Programs are� The Institutional Structures of Government and Programs are

inconsistent with the PBB approach

� Allocation of Compensation of Employees ( Wages and Salaries) to

programs and sub-programs poses a challenge since it is currently

centrally managed. This is not consistent with the PBB principles.

� Appropriation and Budget Execution concepts, methods and

processes need to be critically reviewed before full introduction of

PBB.

� Significant capacity will need to be developed in MOFEP and MDAs.

What is the way forward for

2012� Review the 2012 Programme Based Budgeting of the

seven (7) pilot MDAs.

� Review the PBB guidelines and Training Manual

� Train all the (35) MDAs in PBB to:� Train all the (35) MDAs in PBB to:

• Determine their programme structure.

• Write narrative statement.

• Develop performance indicators

• Cost their programmes for the full roll out in 2014

Conclusion� The budget process in Ghana is still ‘work in

progress’. Major PFM reforms continue to take

place.

� Introduction of PBB is part of the overall

ongoing PFM reforms.

Expectation is that it will lead to incremental � Expectation is that it will lead to incremental

improvements in our budget management

and improve on service delivery

�Will require commitment and collaboration of

all stakeholders to ensure success.

THANK YOU