MMDAS asked to adopt prudent financial management
The Minister of Finance, Mr Seth Terkper, has called on metropolitan, municipal and district assemblies (MMDAs) to adopt prudent financial management in order to access long-term borrowing to finance large capital investments.
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He said good financial management, which is a precondition for sustainable borrowing, was lacking in the MMDAs, adding that “a recent study noted that only 25 MMDAs are in a position to borrow; even with that, not all of them can borrow every year”.
“It is, therefore, important for MMDAs to improve their financial management and budgeting practices to create the environment which can support the possibility for prudent and sustainable borrowing for public infrastructure and services at the local level,” he stated.
Mr Terkper made the call in a speech read on his behalf at the 2016 Composite Budget Hearing of MMDAs in the Greater Accra Region in Accra yesterday.
The two-day event, meant to inform the public about the MMDAs 2016 budget, was attended by representatives from the 16 MMDAs in the Greater Accra Region, as well as officials from the Ministry of Finance and the Controller and Accountant-General’s Department (CAGD).
Budget hearing
Mr Terkper stated that the budget hearing had become a critical activity in the MMDAs annual budget preparation process, as it provided regional coordinating councils (RCCs) the opportunity to ensure that the policies of the assemblies were consistent with the National Development Policy Framework, as developed by the National Development Planning Commission (NDPC).
He announced that the government was in the process of reviewing the draft 2008 Local Government Finance Bill to fashion an appropriate framework to empower the assemblies to borrow for long-term investment projects.
Improve revenue generation
Mr Terkper urged the MMDAs to step up their revenue mobilisation in order to improve development at the local level and reduce their dependency on the central government.
“The huge potential in property rate collection remains untapped. There are many property owners who are yet to pay any rate to the assemblies because the assemblies have not yet approached them to collect the rates. MMDAs must, therefore, find innovative ways of mobilising resources in an equitable and efficient manner,” he urged.
For his part, the Greater Accra Regional Minister, Nii Laryea Afotey-Agbo, said the composite budget process was designed to introduce financial discipline and management at the local government level and also ensure that various funding sources for the MMDAs were integrated to reduce duplication in the use of resource
Internally generated funds
Some of the presentations made by the MMDAs showed a low level of Internally Generated Funds (IGFs).
The Accra Metropolitan Assembly (AMA), for instance, expects to raise GH¢111,957,171.08 by the end of this year, out of which only GH¢40 million, representing 35.7 per cent, is expected to be internally generated.
The assembly also presented a budget of GH¢115,696,203.90 for 2016, of which GH¢42 million, representing 36 per cent, would be IGFs.