Improving PFM Governance in Ghana: Lessons from the Petroleum Revenue Management Framework

Abstract

It is expected that an effective PFM system should ensure efficient allocation of scarce resources, ensuring that scarce resources are deployed to their optimal use; leading to effective delivery of public goods and services to the citizenry at optimal prices; and consequently contribute towards the achievement of a sustainable fiscal position. This shouldbring about economic development and poverty reduction. The evidence suggest that Ghana’s PFM system has so far not delivered good economic governance. The reports of the Auditor General of the Republic of Ghana repeatedly highlight: noncompliance with the PFM legal framework, and findings of corrupt practices against a number of public officers and institutions. Lessons can be drawn from the petroleum revenue management framework to improve the PFM governance framework.Such lessons include: having extensive and meaningful consultations with relevant stakeholders in developing the PFM legal framework to ensure that it captures the key features of a functional PFM system, having clear fiscal responsibility rules that guide spending, savings and investment decisions, administering a strong and robust accountability framework that holds spending officers to account in a fair and just manner, and having a mechanism to compel mandatory reporting in accordance with established reporting standards.