Spending Arrears to be Tackled as Finance Ministry Announces New Strategy
To address the persistent challenge of accumulating arrears in public expenditure, the government has rolled out a comprehensive strategy aimed at both clearing existing arrears and preventing further accumulation.
The initiative was announced by the Finance Minister, Dr. Mohammed Amin Adam, during a sensitisation and training workshop for Chief Directors and Heads of Covered Entities.
Addressing attendees, Dr. Adam highlighted the urgency of tackling the issue of arrears, which has become a significant policy challenge in many emerging economies, including Ghana.
He noted that arrears constitute a substantial portion of public expenditure, necessitating urgent reforms.
“Without doubt, the socio-economic implications of accumulating unsustainable arrears are enormous and far reaching. It impacts the operations of businesses and enterprises – whether small or big sized, undermines financial sector performance, raises the cost of doing business for government and reinforces the view that more is required to level-up with the expectations of sound public finance management,” the minister said while highlighting the widespread prevalence of this issue across the continent.
He added that ultimately, the issue challenges the effectiveness of fiscal policy and results in poor public service delivery to citizens.
The new strategy focuses on a two-pronged approach – clearing existing arrears and preventing future build-up. To achieve this, the government will implement various measures, including enforcing stricter adherence to the Public Financial Management (PFM) Act.
The Act, enacted in 2016, establishes regulations to ensure sound financial management practices.
One key measure involves enforcing sanctions against those who violate the PFM Act’s regulations. This aims to deter non-compliance and promote fiscal responsibility.
Additionally, the government will publish ‘league tables’ ranking covered entities based on their adherence to commitment control measures. These tables will serve as a public record and potentially incentivise better financial practices.
The strategy also emphasises stricter budget commitment control. This entails ensuring that expenditures stay within approved budgetary limits and avoiding unauthorised commitments. The minister pinpointed some of the current challenges contributing to arrears, including “unbudgeted expenditures” and “weak commitment control”.
The workshop specifically targeted representatives from Covered Entities, which are government agencies and institutions that fall under the PFM Act’s purview.
By training these officials on the new strategy and the evidentiary requirements for prosecuting financial infractions, the government aims to ensure effective implementation and deter future mismanagement, Dr. Adam noted.
The Public Financial Management Compliance Desk (PFM-CD), established by the Ministry of Finance, will play a central role in these efforts. The PFM-CD is tasked with developing and implementing measures to strengthen compliance with PFM laws and promote transparency in public spending.
The Finance Minister emphasised the crucial role of Covered Entities in the strategy’s success.
“The effectiveness of these measures is subject to the full cooperation of principal spending officers, budget officers, procurement officers, internal auditors and the Internal Audit Agency,” he said, urging their collaboration to ensure the measures deliver the intended results.
The minister, while imploring the relevant stakeholders to play their parts, also stressed government’s commitment to these reforms.
“I would, therefore, appeal to all Chief Directors and Heads of the Covered Entities to embrace these expenditure reforms… I would count on you to engage your political heads on the government’s policy direction to ensure the effective implementation of the measures at your various entities. I assure you of the government’s commitment to these interventions,” he noted.
Aone-of-a-kind passenger cruise ship MV World Odyssey, has visited Ghana’s ports carrying close to 500 students from around the world.
The Bahamas-flagged, 175-meter-long vessel serves as a floating university campus for undergraduate and post graduate students, allowing them to travel the world while earning academic credit.
The last port of call was Cape Town before spending 3 days in Tema and Takoradi respectively. It was en-route to Tanger Med in Morocco when last checked.
It is the sixth ever ship under Semester at Sea, a program run by the Institute for Shipboard Education in association with Colorado State University in the USA.
Semester at Sea offers a variety of academic programs, including courses in liberal arts, environmental studies, international business, and more.
In addition to academics, students also engage in various extracurricular activities and cultural immersion experiences while on-board the ship. These may include field trips, guest lectures, community service projects, and cultural exchanges with locals at port stops.
The captain of the ship, Jan Christiansen and the Executive Dean for the Semester at Sea Program, Marti Fessenden and a few students told Eye on Port more about this unique academic experience.
The Captain said “We stay very long in the ports, mostly we stay up to six days in the different countries. We try to balance the educational part of the program with the maritime experience so that the students have enough time to explore the different countries, the different cultures, and also to meet the local population of the countries. That is the idea behind semester at sea.”
“All of these students will tell you that they interact with students from around the globe. Another thing I think is important for you to know about this program is, as we sail from different countries, we bring on a university student from that country. So we just sailed from Cape Town to Ghana and on the ship with us was a student from the University of Ghana, Legon. She spent the week in different classes talking with these students and interacting with our faculty,” the Executive Dean added.
Benjamin Amoh, touched on why the OMA Ghana has gained prominence in providing ship agency and husbandry services for the budding cruise sector in Ghana.
“What makes us special is the experience and the personal touch of hospitality we provide to all of our guests, including the students, and some have even familiarized with our brand. OMA always wants to give you the best. We hope that more passenger ships will visit Ghana since it is a wonderful country and we want people to come and experience our culture. This specific ship, the MV World Odyssey, will surely return in October.”
The Africa Centre for Energy Policy (ACEP) has called on oil marketing companies and Bulk Oil Import, Distribution, and Export Companies (BIDECs) to pursue legal action against the National Petroleum Authority (NPA) over its planned implementation of amended petroleum pricing guidelines.
The new guidelines, which include setting a price floor for petroleum products, have sparked opposition from industry players. ACEP emphasised its commitment to advocating a well-regulated downstream sector prioritising competition, product quality, and consumer protection.
The energy think-tank urged OMCs and BIDECs dedicated to improved service delivery to challenge what it deemed as illegal regulations and seek recourse through the courts.
"ACEP remains committed to advocating a well-regulated downstream sector that prioritises competition, product quality, and consumer protection. We urge OMCs and BIDECs, who are committed to improved and cost-effective service delivery, to fight such illegal regulations and proceed to court to avert regulatory sabotage of genuine business efforts. ACEP will support any such challenge and demand accountability from the NPA in the public interest.”
ACEP underscored concerns about regulatory failure to protect consumers and the industry, citing issues such as the influx of illicit products, tax revenue theft, and burdensome charges passed on to consumers.
It criticised the NPA's approach as "lazy," arguing that price floors reward inefficiency, stifle competition, and harm consumers. ACEP called on the NPA to adopt a more targeted regulatory approach focused on enforcing progressive rules and addressing unfair practices without hindering business innovation.
“Rather than addressing the aforementioned challenges, the NPA is opting for a 'lazy' solution that rewards inefficiency, discourages competition and punishes the consumer at the pump. Setting price floors creates a system that benefits OMCs and Bulk Oil Import, Distribution, and Export Companies (BIDECs), which have a weaker market presence and are struggling to sell volumes at competitive rates. This protectionist policy is detrimental to creativity and competitive business strategy and ultimately harms consumer welfare”, ACEP said in a statement.
As the African Development Bank turns 60 this year, the institution will reflect anew at its upcoming Annual Meetings, on the ongoing economic challenges facing its member countries and the participation of African countries in the global financial system.
Prof. Vincent Nmehielle, the Group’s Secretary-General and Kevin Urama, Chief Economist and Vice President for Economic Governance & Knowledge Management, addressed journalists on Wednesday 03 April, during a press conference ahead of its Annual Meetings, scheduled from 27 to 31 May 2024 in Nairobi, Kenya. The 2024 meetings will be held under the theme: “Africa’s Transformation, the African Development Bank Group, and the Reform of the Global Financial Architecture”.
The meetings will offer solutions in which the Bank and other Multilateral Development Banks (MDBs) can respond better and faster to scale up resources for the sustainable development of the continent.
Nmehielle said the Bank’s governors would engage with the president of the African Development Bank to explore ways in which the Bank and other Multilateral Development Banks (MDBs) could respond to the call to work better together to significantly scale up resources for the sustainable development of the continent.
This year’s Annual Meetings will bring together more than 4,000 delegates and participants, Nmehielle said:
“Despite a sustained economic growth over the past two decades, Africa’s economic transformation remains incomplete…The Knowledge Events will, therefore, explore how best to fasttrack structural transformation across the continent. The events will also address the importance of a reconfigured global financial architecture as an engine for structural transformation,” the Secretary-General said.
Elaborating on some of the key knowledge events to be held during the meetings structured around its theme, Kevin Urama, Chief Economist and Vice President for Economic Governance & Knowledge Management, said the Presidential Dialogue would bring heads of state and governors together to take stock of measures and reforms:
“In all our research we have found that financing has been a major constraint of accelerated transformation on the continent,” Urama said.
He added that an event on measuring the green wealth of the continent would unpack “how Africa’s natural resources could drive the transformation of the continent even better than in previous years.
“In 2024 we see the continent growing around 4% - much higher than the global average. Over 15 countries were even higher at 5%,” he said.
Urama described this as impressive given all the shocks the continent is facing. However, population growth was a big setback, Urama warned, as population growth which did not match economic growth leads to continuing poverty, despite growth.
Getting governance right impacts poverty “Africa has to get its governance right,” Nmehielle said. “We have to manage our resources well…how to engage to minimize waste of resources…Africa must come to the point where it sees governance as an important instrument of economic development. “We all have to put our hands on deck – the government, the private sector and all citizens,” he added.
Answering questions from journalists on economic reforms in Zimbabwe, Urama said the southern Africa nation was on track to pursue its economic transformation goals. Debt, management, improving risk ratings of countries and related topics would be on the table at the Annual Meetings as part of global architectural reform discussion, he added:
“Already the government of Zimbabwe is doing a lot to address debt arrears clearance. He said the Bank is working with the minister of finance to ensure debt reduction models to enable the country to maximise its huge economic advantages, Urama said.
He commended Mthuli Ncube, the nation’s finance minister as well as the country’s central bank governor for putting Zimbabwe on track. “If you look at the GDP growth it is really on a very positive trajectory,” Urama said.
Africa is a key participant in the ongoing dialogue around global architectural reforms, Urama noted. He said the Bank under the leadership of its president Dr. Akinwumi Adesina, was leading and shaping the conversation through innovation and pioneering initiatives such as hybrid bonds and a plan which would see International Monetary Fund Special Drawing Rights, or SDRs, channeled to multilateral development banks who could leverage them to provide extra financing for development.
“Africa is really driving that conversation significantly,” Urama said:
“If there is anything you want to take away that the debate is since 1945…the development finance has been structured and deployed, does not favour Africa, and the developing world and there is therefore the need for reform,” Nmehielle said. “That is the central message.”
Both leaders said Africa’s access and participation in the global financial system was key and that included African countries’ greater participation as well as preparing themselves to better take advantage of available access to finance.
The statutory annual meetings are the African Development Bank Group’s most important event of the calendar year. The 59th Annual Meetings of the Board of Governors of the African Development Bank and the 50th Meetings of the Board of Governors of the African Development Fund will take place at the Kenyatta International Convention Centre (KICC) in Nairobi, Kenya.
Source: afdb