Mary Betley Andrew Bird Adom Ghartey …

1 Mary BetleyAndrew BirdAdom Ghartey2012:8 evaluation of public financial management reform in Ghana, 2001 2010 Final Country Case Study ReportJoint evaluation evaluation of public financial management reform Joint evaluation 2012:8 evaluation of public FinancialManagement Reformin Ghana 2001 2010 Final Country Case Study ReportJoint evaluation 2012:8 Submitted by fiscus public finance consultants and Mokoro ltd to the evaluation management groupMary BetleyAndrew BirdAdom GharteyJune 2012 Authors: Mary Betley , Andrew bird , Adom GharteyThe views and interpretations expressed in this report are the author and do not necessarily reflect those of the commissioning agencies, Sida, Danida and evaluation 2012:8 Commissioned by Sida, Danida and AfDBDate of final report: June 2012 Published by: Sida, 2012 Copyright: Mary Betley , Andrew bird , Adom GharteyDigital edition published by: Sida, 2012 Layout and print: Citat/Edita 2012 SIDA61499enurn:nbn:se:sida-61499enISBN: 978-91-586-4196-9 This publication can be downloaded/ordered from.

2 And AbbreviationsAAP(HIPC) Annual Assessment & Action PlanADMDAid and Debt management Division AfDBAfrican Development BankAFROSAIA frica Organisation of Supreme Audit InstitutionsARICA udit Recommendation Implementation CommitteesBDUB udget Development UnitBMZG erman Ministry of Cooperation and DevelopmentBPEMSB udget and public Expenditure management SystemCABRIC ollaborative African Budget reform InitiativeCAGDC ontroller and Accountant General s DepartmentCEPSC ustoms, Excise and Preventative ServiceCFA ACountry financial Accountability AssessmentCHRAJC ommission on Human Rights and Administrative Justice CIDAC anadian International Development AgencyCPIAC ountry Policy & Institutional AssessmentCSOC ivil Society OrganisationsDACD evelopment Assistance Committee (of the OECD)

3 DANIDAD anish International Development AssistanceDCDeveloping CountryDFIDD epartment for International Development of the UKDPD evelopment PartnerECEuropean CommissionERPFME xternal Review of the public Finance management EUEuropean UnionFA AFinancial Administration ActFARF inancial Administration RegulationsFCFinance CommitteeFMISF inancial management SystemsGASG hana Audit Service GBSG eneral Budget Support6 GDPG ross Domestic ProductGIFMISG hana Integrated financial management Information SystemG-JA SGhana Joint Assistance Strategy GNIG ross National IncomeGoGGovernment of GhanaGPRSG rowth and Poverty Reduction StrategyGRAG hana Revenue AuthorityGSGDAG hana Shared Growth and Development AgendaGTZG erman Technical CooperationHDIH uman Development IndexHIPCH ighly Indebted Poor Countries IAAI nternal Audit AgencyIAUI nternal Audit UnitICRI mplementation Completion ReportIDAI nternational Development Assistance IEGI ndependent evaluation Group (World Bank)

4 IFMSI ntegrated financial management System IMFI nternational Monetary FundINTOSAII nternational Organisation of Supreme Audit InstitutionsIPPDI ntegrated Personnel and Payroll Database system LGAL ocal Government AuthorityMDAsMinistries, Departments and AgenciesMDBSM ulti-Donor Budget Support MDBS-FMulti-Donor Budget Support FrameworkMDGM illennium Development GoalMMDAsMetropolitan, Municipal, and District Assemblies MoFEPM inistry for financial and Economic PlanningMoLGRDM inistry of Local Government and Rural Development MPsMembers of ParliamentMTEFM edium Term Expenditure FrameworkNAON ational Audit OfficeNDCN ational Democratic CongressNDPCN ational Development Planning CommissionACroNymS AND ABBrEvIAtIoNS7 ACroNymS AND ABBrEvIAtIoNSNPMNew public ManagementNPPNew Patriotic PartyODAO fficial Development AssistanceOECDO rganisation for Economic Cooperation & DevelopmentOHCSO ffice of the Head of Civil Service PACP ublic Accounts Committee PAFP rogress Assessment FrameworkPBAsProgramme Based Approaches PDParis Declaration PEFAP ublic Expenditure & financial AccountabilityPERP ublic Expenditure ReviewPETSP ublic Expenditure Tracking SurveyPFMP ublic Finance

5 ManagementPIUP roject Implementation UnitPPBP ublic Procurement Board PPPP urchasing Power ParityPSCP ublic Service Commission PUFMARPP ublic financial management reform ProgrammeRAGBR evenue Agency Government BoardSAPS trategic Action PlanSBSS ector Budget SupportSECS tate Enterprises CommissionSECOS wiss State Secretariat for Economic AffairsSMTAPS hort and Medium Term Action Plan for PFM SSASub-Saharan AfricaST/MTAPS hort & Medium Term Action Plan (for PFM reform )TATechnical AssistanceTINT axpayer Identification NumberTSAT reasury Single AccountUNDPU nited Nations Development ProgrammeUNICEFU nited Nations Children s FundUSDU nited States DollarWBWorld Bank8 Table of ContentsExecutive Summary ..101 Summary of objectives and Approach .. Objectives of the evaluation .. evaluation approach.

6 evaluation questions .. Fieldwork process .. Report Structure ..192 Inputs and Context: the design of PFm reform .. The reform context .. PFM reform baseline .. Direct reform Inputs .. Structures to design and manage PFM reform inputs .. Complementary Donor inputs to PFM reform .. Civil Society pressure for PFM reform .. Relevance of PFM reform Inputs ..363 outputs: the Delivery of PFm reform .. Key reform outputs .. Efficiency and coordination of reform outputs .. External drivers and blockers of change ..524 outcomes and overall Assessment .. Changes in PEFA scores .. Relevance of PFM improvements for service delivery, especially for women .. The effectiveness of PFM reforms: from inputs to intermediate outcomes ..635 Conclusions and Wider Lessons.

7 Summary of key conclusions .. Wider lessons .. Recommendations for the Design and management of PFM reform processes ..71 Annex A: Summary matrices of responses to evaluation Questions for Country and Component Case Histories ..77 Annex B: List of Persons Consulted ..117 Annex C: List of references ..120 Annex D: Summary of PFm reform inputs, outputs and intermediate outcomes ..124 Annex E: terms of reference ..130 Joint Evaluations ..1429tABLE oF CoNtENtStable of Figures & tablesFigure 1. The evaluation Framework and the place of the evaluation Questions within the Intervention Logic ..16tab l e 1: Overall Budgetary Trends, 2001-2010 ..22tab l e 2: DP allocations to PFM reform activities ..28table 3: Overview of Development Partner funding for PFM reform ..28tab l e 4: Total MDBS Commitments and Disbursements 2003-2010.

8 29tab l e 5: Poverty-Reducing Expenditures ..61 Box 1: evaluation questions ..17 Box 2: Summary of Key PFM Events, Late 3: Summary of PUFMARP 1997-2003 ..26 Box 4: Summary of GoG s PFM Short and Medium Term Action Plan 2006-2009 ..27 Box 5: Comparison of 2006-09 Short & Medium Term Action Plan with identified weaknesses ..37 Box 6: Alignment of 2006-2009 Short & Medium Term Action Plan with PEFA Results ..40 Box 7: Overview of PFM reform Outputs and DP Contributions ..46 Box 8: Summary of changes in intermediate outcomes based on PEFA assessments ..58 Box 9: Summary of PFM reform inputs, outputs, and intermediate outcomes ..7310overview of findingsThis Country Report has been prepared by Fiscus Limited, UK, in collabora-tion with Mokoro Ltd, Oxford, as one of three country reports in the Joint evaluation of public financial management reform , managed by the Afri-can Development Bank, Denmark and Sweden.

9 The evaluation looked at two main questions: (i) where and why do public Finance management (PFM) reforms deliver results and (ii) where and how does donor support to PFM reform efforts contribute most effectively to results? Our overall conclusions are presented in the Summary Matrix contained in Annex A, which summa-rises, for the overall Ghana PFM reform programme 2001 -2010 and for four component areas within the reform programme, our answers to the 12 Evalu-ation Questions, posed within the study. The study s main conclusion is that, relative to the significant funds expended on public Finance management (PFM) reform over the study period, success has been largely disappointing. The most substantial progress was found in a stronger legislative base. However, similarly to other countries, Government of Ghana (GoG) has experienced significant challenges in implementing the new laws.

10 Otherwise, the most effective reforms appear to have been the rev-enue management activities, as they have led to a sustained output in the form of changed processes and a significant increase in revenues as a share of Gross Domestic Product (GDP) during the period the period studied, PFM outcomes deteriorated in a number of key areas, including budget credibility, the build-up of expenditure arrears, and compliance with expenditure controls. The deterioration in outcomes is largely a consequence of the failure to achieve a number of desired PFM reform outputs, including a fully-functioning Medium Term Expenditure Framework (MTEF), a workable financial management Information System, and greater efficiency in resource flows to Ministries, Departments and Agen-cies (MDAs) and MMDAs.