PIAC wants criteria to guide ABFA funded projects
The Public Interest and Accountability Committee (PIAC) has called for a public criteria to guide the prioritisation of projects funded from the Annual Budget Funding Amount (ABFA).
The criteria, the committee said, must demonstrate how projects would be linked to the desired outcomes for spending ABFA.
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It should also include maximising the rate of economic development; promoting equality of economic opportunities to ensure citizens' wellbeing; ensuring even and balanced development of the regions; and guided by a medium-term expenditure framework (MTEF).
“The Minister of Finance's selection of ABFA priority areas should have an evidence-based justification and criteria to ensure the selection leads to the intended objectives of ABFA as specified in the law,” PIAC said in its ‘Assessment of the Management and Use of Ghana’s Petroleum Revenues (2011-2020) report,” launched in Accra on March 1.
It noted that the spreading of ABFA over myriad of projects has resulted in an inefficient use of ABFA funds.
“There have been gross inconsistencies in disbursements hence many uncompleted projects, and cost incurred because of penalties from delayed payments, among other things.”
“As a result, many stakeholders believe ABFA has not met their expectations in maximising the rate of economic development and enhancing their well-being,” it said.
Therefore, to meet these expectations, the report said the Petroleum Revenue Management Act, 2011 (Act 815), as amended by Act 893 (PRMA) requires ABFA funds to be aligned with the medium-term plans (MTPs) to generate efficient development outcomes.
It is expected that MTPs will go through an evidence-based process to prioritise spending in the medium term.
It added that to improve effective disbursements of the ABFA, all beneficiary MDAs must be required to prepare ABFA projects, complete procurements, and ensure clear projects are ready for disbursement before they qualify to be funded by the ABFA.
ABFA spending
Under the PRMA, the ABFA is the main conduit for petroleum revenue financing under the national budget, such that in practice, it presents the strongest link between petroleum revenues and inclusive economic growth.
Accordingly, its use and expenditures are required to be subject to the same budgetary processes, while the PRMA places particular emphasis on the need to ensure efficient allocation, responsible use and effective monitoring of ABFA expenditure.
ABFA spending falls along three core themes: public investments (capital spending including allocations to the Ghana Infrastructure Investment Fund (GIIF), consumption (recurrent spending) and PIAC funding.
Within public investments and consumption (and in the absence of a long-term development plan) 12 priority areas are to guide revenue utilisation.
These are; i. Agriculture and industry ii. Physical infrastructure and service delivery in education, science and technology iii. Potable water delivery and sanitation iv. Infrastructure development in telecommunication, road, rail and port v. Physical infrastructure and service delivery in health vi. Housing delivery vii. Environmental protection, sustainable utilisation, and protection of natural resources viii. Rural development ix. Developing alternative energy sources x. Strengthening of institutions of government concerned with governance and the maintenance of law and order xi. Public safety and security xii. Provision of social welfare and the protection of the physically disabled and disadvantaged citizens.
However, the government is enjoined to prioritise not more than four areas when submitting a programme of activities to use petroleum revenues. The selected priority areas are to be reviewed every three years and presented to Parliament for approval by the Minister for Finance before implementation.
ABFA past 10 years
Over the last decade, ABFA has provided an important financing opportunity in the national budget to increase public spending capacity as well as generate higher social returns.
Total benchmark revenue allocations to ABFA amounted to GH¢9.41 billion ($2.61 billion) while allocations amounted to GH¢8.51 billion ($2.28 billion).
The remaining unutilised amounts were swept into the Consolidated Fund under government’s Treasury Single Account (TSA) policy.
The ABFA has been spent on agriculture, amortisation of loans, capacity building (including oil and gas), health, education, PIAC, Ghana Infrastructure Investment Fund (GIIF), industrial development, roads, rail and other critical infrastructure.
Roads, railways and other infrastructure consumed GH¢4.56 billion (53.51per cent) of total ABFA allocations. Physical Infrastructure and service delivery in education on the other hand took GH¢1.85 billion (21.74 per cent) of total ABFA allocations.
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Specifically, the government’s flagship programmes, such as the Free SHS policy accounts for most of the ABFA education spending. Most of this predominantly went into service delivery as compared to physical infrastructure like school buildings.