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Expenditure-public sector accounting in Ghana

Expenditure-public sector accounting in Ghana

Government Expenditure

Expenditure-public sector accounting in Ghana, As discussed in the introduction to public sector accounting, the public sector is the largest single organization, employer and spender in Ghana. The magnitude of its receipts and expenditure has no parallel in the private sector. More importantly, its operations have been growing decade after decade. The effect of such growth is that the composition of its expenditures has become more varied. The growth in public spending, together with the changes in the composition of public expenditure meant that entities depending on the consolidated fund experience associated growth and variation in numbers and structures.

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Sources of Government Revenue in Ghana

In Ghana, public expenditure could be defined as expenses, commitments, obligations and transfer payments of government. Although there is the closure of public accounts at the end of each calendar year, public expenditure never ceases and continues from year to year.

The main composition of public expenditure in Ghana may be outlined as follows


Personal Emolument 36%
Social Security Fund 3%
Administration 3%
Service 24%
Investment 9%
District Assembly Common Fund 4%
Petroleum Related Fund 9%
Ghana Education Trust Fund 4%
Road and Non-Road Arrears 2%
HIPIC Expenditure 3%
Public Debt Interest 3%
Utility Price Subsidies

Description of Expenditure Items

Transfers for salaries, wages and other benefits

These include salaries of public officers on established posts and non-established post, contract appointments, daily-rated employees and officers on probation. Others include social security contributions, miscellaneous allowances.

Administration Expenses

These are the overhead expenditures of public organizations and include utilities and postal charges, sanitation charges, office cleaning, office consumables, printing and publications, rent, maintenance, travel and transport and financial charges.

Service Expense

These are expenditures incurred by the public organization in carrying out their mandate to achieve their objectives. They are expenses made toward the provision of services to third parties which include training and conference costs, consultancies, materials and consumables, stationery, refreshments, uniform and protective clothing, printing and publications, rent of plant and equipment and travel and transport.

Investment expenses

They are capital expenditures for which the benefits may be enjoyed by the organization for more than one accounting period. These include the cost of construction of buildings, road, bridges, rehabilitation of vehicles, machines, plant and equipment, purchase of plant, equipment, furniture and vehicles.

Pension and Gratuity

These are regular or periodic payments made to retired office4rs of the public services and their beneficiaries who qualify to be paid retiring awards base on the CAP 30 pension programs

District Assembly Common Fund

These are costs related to imports of crude oil brought into the country for refining purposes borne by the government. They include costs on foreign currency changes, subsidies and others.

Ghana Education Trust Fund

This is a special fund established by the government for the purposes of developing educational infrastructure and other meeting education-related costs in the country.

Road and Non-Road Trust Fund

These are monies set aside by the government to pay for arrears on the construction cost of road and other infrastructure which could not be met by the road fund and other financial allocations.

HIPC Expenditure

The HIPC initiative (Highly Indebted Poor Countries Initiative) adopte3d by the government provides substantial relief in the form of cash for poverty and HIPC related transactions. Payment of the principal and interest on HIPC funds are paid into the consolidated fund as receipts and later paid out for HIPC related expenses.

Public Debt Interest

These are regular and periodic payments of interest charges made by the government to service the country’s debts.

Mode of Funding Institutional commitments


The commitment of a greater number of government institutions are funded by appropriations

An appropriation is approval by parliament of annual or supplementary budget allocations to reflect expenditure commitments classified under programs or activities, namely heads, objective, outputs, items and sub-items.

Appropriations are used only for the purposes intended and within the limits set by the classification in the approved estimated of the government institution.

Local Revenue

Metropolitan, municipal and district assemblies are empowered by law to raise local taxes to finance their operations. These include rates, fees and fines, land, licenses and rents. Rates may be current basic rates, property rates and special rates, fees and fines, including services that the assembly is responsible to provide; for example, markets, slaughterhouses, dressing stations, kraals, lorry parks, sanitation facilities, marriage registration, building permits, birth and death registration, court fines, etc.

Land revenue includes the assembly’s share of the revenue from stool lands. Licenses those issued to include herbalist, chop bars, kiosks, charcoal dealers, etc. rent includes rent from market stalls and stores and rents on assembly property, etc.

Transfers of salaries, wages and other benefits to MMDAs

The government also funds public institutions by paying remuneration in cash or in-kind, such as clothing, boots, shoes, to an employee in return for work done.

In addition to wages and salaries, compensations to employees include social security contributions made by the government on behalf of the employees.

Supply of Fixed Capital, Goods and Services

This include:

The government office premises, sanitation equipment, fire tenders, hospital ambulances, public vehicles and other capital items.

Interest charges, payment of VAT, Port Duties etc.,

The government sometimes pays port charges, VAT and settles interest payments for government units which may not have funds in their budgetary allocations to settle these bills.


The government sometimes assists institutional units by way of subsidies usually for utilities and other expenses.


The government frequently pays grants in cash or in-kind to many government institutional units such as the universities and other educational units. Grants are also paid to metropolitan, municipal and district assemblies in the form of a common fund.

Social benefits, contingencies etc.

These are paid by the government in cash or in-kind to institutional units to off-set, off- budgetary expenditure.

Revenue retention

Some government institutional units such as the ministries of health and agriculture are allowed to retain certain percentages of revenues they generate to finance their operations such revenue often referred to as internally generate fund.

Special Funds

A special is a fund established under the law from monies received by, or on behalf of the government, and paid out to the department responsible for a special purpose. It specifies the purpose of the fund, the administering authority, amount receivable and payable, and any special rules necessary for the transaction of business.

Types of Expenditure Commitment Process
Predetermined expenditures Comprise interest, debt repayment, subscriptions, etc. and which do not lend themselves to increases or reductions
Regular Expenditure Reflects outlays including pensions, some transfer payment etc. incurred on current or ongoing polices, e.g., pensions. Reductions are possible through policy adjustments in planning often present problems in projecting the rate of spending
Expenditures that could be modified in the light of desired government influence Reflect outlays of an investment or development character, including public works that could be adjusted in either direction.
Expenditures are dependent on Economic climate. Outlays on subsidies price supports, etc., which may be based on specified economic indicators. Outlays could ideally have trigger clauses so that consideration is given to policy options after a critical stage is reached.
Demand-dominated expenditure Lending and related operations by the government is included in this group. The importance of this group depends on the magnitude and purpose of lending.
Contingent expenditure Expenditure that covers contingent liabilities incurred through government guarantees. Such outlays are relatively rare and unpredictable.
Emergency expenditure Emergency public works, large investment projects increase in investment by public utilities, crash programs such as employment of educated youth and the energy crises.
Extended grants Flexibility to spend beyond the fiscal year without further legislative approval
Cyclical equalization Release of funds to specified projects and programs from funds accumulated during periods of low prices e.g. TOR debts/financing of crude oil imports.
Eric Adjei

Eric Adjei

A professional with six (8) years’ experience in finance and accounting. Demonstrating expertise in accounting procedures, computerized accounting system management and financial operations. Financially astute with excellent analytical, problem solving, management, people supervision, organizational, business administration, operation and commercial management and teaching skills.

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