198
Beyond the Annual Budget
items, and not by programs, ceilings on spending categories do not reflect systematic budget planning. Dual budgeting was abandoned when the MTEF was put in place. Guidelines provide limited flexibility for spending agencies to change allocations across budget line items, after consultation with the Ministry of Finance and Economic Planning. In practice, spending agencies pay little attention to budget ceilings, which are routinely exceeded, especially when budgets are linked to specific financing sources. There is no contingency reserve, although part of the budget is appropriated as contingency to meet unforeseen expenditure demands. The unused part of the budget lapses at the end of the year, but it can be voted on again in the following year. Unused cash held by spending agencies at the close of the year is returned to the treasury.
Implementation The MTEF is a project of the Budget Division of the Ministry of Finance and Economic Planning. The Budget Development Unit of the Budget Division coordinates the MTEF and budget preparation, starting with development of the top-down resource envelope. Spending agency budget committees prepare detailed bottom-up budget submissions. However, top-down ceilings are not approved by the cabinet, with the result that they are not taken seriously and budget submissions are not resource constrained. The budget timetable is too tight for spending strategies or intersector trade-offs to be considered seriously. The MTEF and budget processes have been developed in parallel and are supposed to be fully compatible with and supportive of the Ghana Poverty Reduction Strategy. However, the MTEF was developed as a project rather than a budgeting or PFM reform, and information systems are geared to the requirements of the budget rather than the MTEF. The budget statement reports ceilings for spending agencies for the budget year and two out-years. The annual estimates of spending agencies include program and subprogram ceilings for the budget years, but not for the two out-years. MTEF ceilings are approved by parliament by virtue of their inclusion in the budget statement. The Ministry of Finance and Economic Planning takes the lead in preparing revenue forecasts, which continue to be optimistic, as well as the macro-fiscal framework. Macroeconomic planning is a general weakness. Ghana does not have a fiscal rule, but it has been considering the introduction of a fiscal responsibility law since 2008. Medium-term debt, deficit, revenue, and expenditure targets are included in the budget statement.