The management of the country's public finances and the promotion of fiscal discipline are expected to be enhanced following the passage of the Public Financial Management Bill, 2016 by Parliament yesterday.
The new law repeals the Financial Administration Act of 2003 and its amendment and the Loans Act of 1970.
The law seeks to regulate the financial management of the public sector within a macroeconomic and fiscal framework, as well as define the responsibilities of persons entrusted with the management and control of public funds, assets, liabilities and other resources.
It also seeks to ensure that public funds are sustainable and consistent with the level of public debt and also makes provision for accounting and audit of public funds.
In the medium term, the law is expected to bring about a more efficient, effective and economical use of the resources of the government and contribute to the achievement of national goals.
The new legislation empowers the Minister of Finance to create a sinking fund for the redemption of specified medium- to long-term debt obligations.
It also makes provision for annual report and other reports to be submitted by the Controller and Accountant-General in relation to the activities and operations of the sinking fund.
The reports will also capture the money to be transferred into the fund.
The legislation has clauses that deal with the management and use of government money, treasury single account and the collection, deposit and retention of government revenue.
The Consolidated Fund and its management, custody and management of assets, as well as abandonment of claims and write-off of public funds, are also catered for.
There is also a provision for the creation of an office within the Ministry of Finance to handle public debt management, debt management objectives and strategy and status of government debts.
The office is also required to handle records of government debt and financing arrangements and the publication of government debt and financing arrangements.
There are also provisions for the oversight of local government authorities, public corporations and state-owned enterprises.
The report of the Finance Committee of Parliament on the bill stated that the bill proposed a significant modification to the funding account structure of the government by the establishment of a treasury single account, which is a consolidated bank account system for processing all central government receipts and payment transactions.
It said the bill would instill fiscal discipline and promote stability throughout the management of public finances.
"The committee noted that the introduction of permanent fiscal rules based on fiscal discipline and procedural laws, as well as a requirement for a more detailed analysis and management of fiscal risks, will help promote a stable macroeconomic environment and ensure economic stability," it said.
The law went through a comprehensive, interactive and consultative process, beginning from 2014. The Ministry of Finance worked with the Attorney-General’s Department to prepare the first draft and subsequent drafts.
The ministry also engaged consultants, both local and international, and received technical assistance from the International Monetary Fund (IMF), chief directors and other stakeholders.
In addition, the ministry held two stakeholder engagements with civil society organisations, professional bodies and academia such as the Institute of Chartered Accountants Ghana (ICA), the Institute of Statistical, Social and Economic Research (ISSER), PricewaterhouseCoopers (PwC), the Ghana Institute of Management and Public Administration (GIMPA), the Trades Union Congress (TUC), the Ghana Employers Association (GEA) and the Ghana National Association of Teachers (GNAT).