Clarification Needed With Respect to Budget Allocations

The Chief Director

Ministry of Finance & Economic Planning

Accra

23rd July 2011

Dear Mr. Cobbinah,

Clarification Needed With Respect to Budget Allocations

My organisation, IMANI Center for Policy & Education, studies government policy in order to contribute to informed public debate on the choices confronting us as a nation.

The budget statement is no doubt one of the most important public policy positions Government of Ghana presents for parliamentary and public scrutiny yearly.

Following the release of the supplementary budget statement on the 14th of July 2011, we have sought like other civil society groups to assist in the public education process so vital to democratic development.

We are however hampered by our inability to reconcile what appears on the face of it to be discrepancies, inconsistencies, and in some cases hard-to-rationalise allocation decisions.

We appreciate that the primary sectoral allocations are mainly driven by sector ministries, but insofar as the Ministry of Finance retains the mandate to scrutinise the budget requests of individual ministries and to justify any final allocations on behalf of the President of the Republic, we believe yours is the right quarters to direct our concerns about the 2011 budget, and the 14th July supplement & mid-year review.

Our concerns are as listed below:
In the appendices to the 2011 budget (bearing the digital signature of Mr. Samuel Arkhust):

-We see a consistent pattern of Japan (except in the case of environment-related projects), the EU and the UN agencies (UNICEF, UNDP) – except in the case of the Millennium Village projects - failing or refusing to disburse projected grants and loans for financial year 2010. What is the Ministry's assessment of this situation? Has there been a deterioration in Ghana's development partnership with these countries and organisations, or is it a case of reduced eligibility for facilities in view of Ghana's low-middle income status attainment?

In appendices 8A and 8B, significant sums are devoted to “multi-sectoral” and “contingency” expenditures, to the tune of GHc1,118,439,807. We cannot access the breakdown of these funds through the channels readily available to the public. Can the Ministry provide us with the full schedule of distribution of these funds from 2010 to date (projections and actuals)?

In the document titled: “2011 Appropriation Detailed Summary of Expenditure by Function, Economic Item, and Funding”:

-On page 1 of the aforesaid document, we noticed an allocation of approximately GHc1.645 million to the “Bureau of National Communications” under the Office of National Security. Can the Ministry kindly confirm for our benefit and that of our audience if the budget of this unit is classified? We observe that the only publicly available information related to this unit is its work with the National Communications Authority relating to its migration from the 800 MHz band to the 450 MHz, removing in that process illegal squatters from the latter band (we are informed that this band is required for the use of some mobile network operators in the country). Is the Ministry furnished with any additional information about the work of this entity that it can disclose? We note that the Bureau has no dedicated personnel budget.

-In the same document we noticed an allocation of approximately GHc43 million to a division of the Ministry of Finance named as: “External Economic Relations Division”. We are perplexed by the size of this allotment (approximately 23% of the total budget of the ministry) in comparison with the budgets of other divisions. We observed that this division is a relatively new one. Is the Ministry able to furnish us with additional information, in particular a detailed breakdown, of the expenditure of this division as well as its functions and structures?

-We were also surprised to discover that while the all-important Policy Planning, Budget, Monitoring & Evaluation (PPBME) directorate of the Ministry of Employment & Social Welfare receives approximately GHc18,000, the Management Development & Productivity Institute (MPDI), a subvented agency under the Ministry, receives approximately GHc2.3 million. Our surprise stems from the fact that the MDPI does not appear to be serving any strategic purpose in the wake of the rise of the more effective and dynamic Ghana Institute for Management & Public Administration (GIMPA). The PPBME directorate of the ministry, on the other hand, is critical to the success of the ministry's programs. MDPI purports to be running e-learning programs and yet cannot even maintain a functional website. Surely the attention of the sector ministry was drawn to this perversity and an explanation sought? May we inquire what the justification for this allocation formula, as given by the ministry, was? This underfunding of policy planning units appear to be a worrying feature of the budgets of a number of vital public agencies, including ministries.

-We were also somewhat perplexed to discover in page 7 of the detailed summary of expenditure document that 90% of total headquarters budget of the Ministry of Trade & Industry, which in turn forms 70% of the total budget of the ministry, goes to a division, by name “Industrial Development & Investment Division”, that has no public recognition, is not recognised in the publicly available classification of the ministry's departments, directorates and agencies, and can only be a new creation. Is this new division merely an agglomeration of existing functions played by hitherto autonomus units?

-Equally curious is the line item of the Ministry of Defence budget on page 19 of appropriation summary headed “Defence Advisors”. This entry of approximately GHc12.9 million is definitely not self-explanatory. Subject to prudent classification policies, is the Ministry of Finance able to shed additional light on this line item from the notes taken during your budget meetings with the Ministry of Defence?

We shall be very grateful, Sir, if you and your team are able to assist with this enquiry.

Thank you.

Respectfully submitted,

Franklin Cudjoe,
Executive Director