Govt adopts new system for budget preparation
The government has decided to implement a new system for budget preparation for the next three years using a software which will cost the taxpayer $1.7 million.
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The new system, known as Project-Based Budget (PBB), will replace the current Activity-Based Budget (ABB).
This means that the 2014 fiscal policy to be presented to Parliament next week will have a different format from what parliamentarians and other stakeholders have been used to in the past 15 years.
At a day’s workshop aimed at apprising members of Parliament of the new budget system in Accra yesterday, the Chief Director of the Ministry of Finance, Major Mahama Samuel Tara (retd), said the change was based on a constitutional provision which provided that a budget be prepared on the basis of either activity or programmes.
However, he said, the sheer number of activities in the budget estimates and the much centralised budget execution under the existing arrangement “made the management of the budget very difficult”.
“This is because ministries, departments and agencies (MDAs) have to go to the Ministry of Finance to ask for the release of funds for all activities and any virement have to be approved by the Ministry of Finance.
“This makes the ministry very powerful but it also means very slow, cumbersome and an inefficient process,” he said.
Under the current system, the chief director said it was also almost impossible to monitor budget outcomes.
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MPs’ concerns
When the MPs were given the opportunity to ask questions, a number of them expressed worry over the viability of the new system. They queried the cost of the software and were worried that the total cost could not be provided.
The MP for Dadekotopon, Nii Amasa Namoale, said, “The amount quoted for only the software shows that it is too expensive. What procurement process did it go through and bidding? Are you bringing it for us to approve or it is for our information?”
Responding to the queries, the Minister of Finance, Mr Seth Terkper, explained that the new system was approved by Parliament in 2006 under the e-Ghana project and “the financing component and budget were spelt out. The World Bank and other development partners are providing the resources”.
He said there had been competitive tendering and that in the end the cost had been reviewed from $2.4 million to $1.7 million.
Expected benefits
Explaining the benefits of the new system, Mr Patrick Nomo, the Director of Budget at the Ministry of Finance, said under the old system, there was absence of a strategic focus, a situation which limited the linkage between resources allocation to the MDAs and policy priority.
The new PBB, he said, would respond to weaknesses in the current system, especially with the coming on board of new sources of revenue such as oil and gas resources.
The Head of Budget Reform, Ms Eva Mends, was optimistic that the new system would improve service delivery in organisations.
She said expenditure by various ministries with shared objectives and related activities would be brought together under the new system.
“The PBB will have an identifiable target population, a defined budget, staffing and other necessary resources and clearly defined objectives and outputs,” she said.
Daily Graphic/Ghana