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Dear Learner, Welcome to Session three of Unit two. We hope that by now you are familiar with the various approaches to budgeting in the public sector, as well as their pros and cons.

Introduction to Public Sector Accounting

In Session 6 of Unit 1, you were taken through an overview of the regulatory framework that governs public sector budgeting in Ghana.

You were also promised that specific regulations that relate to specific topic we would be discussing would be considered in subsequent sessions and units. In this unit, we shall be looking at some specific regulations in Ghana that govern the preparation of budgets in Ghana.

In this session, we shall be looking at specific directives from the constitution of Ghana, the Public Financial Management Act 2016 (Act 921) and IPSAS 24.  Objectives at the end of this session, you should be able to:

  1. a) Identify and explain the constitutional requirements of budgeting in Ghana.
  2. b) Identify and explain the roles of key officers in Ghana with respect to budgeting. c) Explain fiscal policies implication for budgeting in Ghana.
  3. d) Identify the content of fiscal policy strategy documents.
  4. e) Demonstrate understanding of knowledge of the content of IPSAS 24

Now you can read on…  

Provisions on Budgeting in the 1992 Constitution of the Republic of Ghana The 1992 Constitution (Article 179 (1)) requires the President to present the budget to Parliament at least a month before the end of the financial year. The Constitution recognizes the importance of planning for the financial receipts and expenditures of the country.


 Public Sector Budgeting | Government and Public Sector Budgeting: PDF Note


Based on the Constitution, the timing of national budgets should be of the essence to national economic managers as it is mandatory for budgets to be ready at least one month before the end of the year.

This notwithstanding, in election years, budgets for the ensuing year could be prepared in those years because of the uncertainty in the continuity of the sitting government.

But even in those years, the sitting government is expected to prepare a three-month projection for the ensuing year for parliamentary approval in order not to bring government machinery to a halt.

This three-month projection must, however, cover the basic revenue and cost items that would keep government machinery running and not cover new projects or programs of government.


It worth noting that even though the Constitution states that the President must present the budget to Parliament, generally, The Finance Minister presents the budget to Parliament on behalf of the President.

Provisions on Budgeting in the Public Financial Management Act 2016 (Act 921) Director of Budget (section 10) The Director of Budget shall be responsible for:

  1. The preparation of the annual estimates and Medium-Term Expenditure Framework within the constraints specified in the Government’s Fiscal Strategy Document;

Medium Term means a period of not less than three years but not more than five years.

Medium-Term Fiscal Framework means an annual rolling three-year period over which the Government plans fiscal policy and likely budget parameters to macroeconomics performance with fiscal results at an aggregate level.

Medium Term Expenditure Framework means an annual, rolling three-year expenditure planning that sets out the medium-term expenditure priorities and hard budget constraints against which sector plans may be developed and refined to match available resources.

  1. The preparation of the mid-year review and quarterly budget execution reports under sections 29 and 34;
  2. Advising the Minister through the Chief Director on all matters related to the annual budget, supplementary budget and the Medium Term Expenditure Framework;
  3. Advising the Chief Director on matters related to the classification of the budget and systems required to prepare the budget; and
  4. Perform any other function assigned by the Chief Director. Fiscal Policy Principles (section 13) Monetary and fiscal policies play key roles in the socio-economic development of every country.

Monetary policies are broad decision guidelines instituted by the Central Bank and Minister of Finance that are meant to regulate the supply of money in an economic system.

On the other hand, fiscal policies are broad decision guidelines to regulate the generation of national income and control over government expenditure.

Section 12 of the Financial Administration Act, is designed to proffer certain basic principles to be followed by managers of state resources on the formulation and administration of state resources.

They are meant for the effective implementation of the Act.

  1. The Principal Account Holder and Principal Spending Officer of a covered entity shall be accountable to Parliament for the performance of their functions with respect to the implementation of fiscal policies;
  2. The fiscal policy shall be developed in a manner that takes into account the impact on the welfare of the current population and future generations;
  3. The Fiscal Policy shall be conducted in a manner that avoids abrupt changes in the evolution of macroeconomic and fiscal indicators; and
  4. The management of public funds, assets and liabilities, including natural resources and fiscal risks in the country shall be conducted in a prudent way, with a view to maintaining fiscal sustainability.

Public funds mean the Consolidated Fund, Contingency Fund and other Fund established by or under an Act of Parliament.

Public money means money in public funds.  Principles on formulation and implementation of Fiscal Policy Objectives

Fiscal policy objectives may be defined as the targets set for the implementation of fiscal policies.

They are the reasons for which broad decision guidelines for raising government revenue and controlling government expenditures are developed.

According to section 13 of the Act, the prime Fiscal Policy objective of Government is to ensure macroeconomic stability of the country within the macroeconomic and fiscal framework.

It is the prerogative of the government to determine any other fiscal policy objective consistent with acceptable principles outlined in section 13. For instance, the theme for the 2017 budget was given as “Sowing Seeds for Growth and Jobs”.

In order to facilitate the achievement of fiscal policy objectives, the Act has prescribed the following principles to guide the setting of the objectives.

  1. Sufficient revenue mobilization to finance Government programs;
  2. Maintenance of prudent and sustainable levels of public debt;
  3. Ensuring that fiscal balance when calculated without petroleum revenues is maintained at a sustainable level over the medium term;
  4. Management of fiscal risks in a prudent manner; and
  5. Achieving efficiency, effectiveness and value for money in expenditure.

Fiscal Strategy Document (Sections 14 – 18) This is a document designed by Government that gives the broad road map for adjusting government expenditure and revenue generation in order to facilitate the economy’s socio-economic development.

The Act requires that the Minister shall, not later than the end of April of each financial year, prepare and submit to Cabinet for approval, a Fiscal Strategy Document.

The Minister shall, on behalf of the President and not later than the 30th of May of each financial year, submit a Fiscal Strategy Document to Parliament for approval according to parliament’s the determined procedure.

The Document shall specify:

  1. The Medium-Term Fiscal Framework of the Government with measurable fiscal objectives and targets to guide short and medium-term fiscal planning for the ensuing three to five-year period, consistent with the fiscal principles and fiscal policy objectives of Government;
  2. An updated and comprehensive medium-term macroeconomic and fiscal forecast covering current developments and multiple year projections;
  3. The Medium-Term Expenditure Framework of the Government with a resource envelope and overall expenditure ceiling;
  4. A statement of policy measures the Government shall implement in order to stay within the confines of the fiscal policy objectives;
  5. A comprehensive and qualified financial risk statement of the public sector showing the impact of alternative macroeconomic assumptions on the forecast fiscal balances and quantified risks of guarantees, contingent liabilities and public-private partnerships;
  6. A debt sustainability analysis including a sensitivity analysis of macro-fiscal risk scenarios; and
  7. A progress report on the implementation of the Fiscal Strategy Document for the previous financial year which shall include
  • An update on the macroeconomic forecasts and fiscal outturns;
  • The implementation of the fiscal policy and progress against the fiscal principles and rules, including targets where feasible;
  • An explanation of deviations from the fiscal principles, rules and targets for the short and medium-term objectives; and
  • An explanation of the measures taken to respond to deviations.

The Fiscal Strategy Document shall contain fiscal policy indicators which shall be adhered to but could be suspended or revised by the Minister when the cabinet has given prior, written approval based on the Minister’s memorandum explaining the rationale for such suspension, the period for suspension and the fiscal adjustment plan (not more than five years).

The approved memorandum shall be laid before Parliament by the Minister, as a matter of information.

The reasons for the suspension of the fiscal rules or targets include the occurrence of a natural disaster, public health epidemic, or war in respect of which state of emergency has been declared by the President in accordance with Article 31 of the Constitution;

an unanticipated severe economic shock, excluding oil price shocks and as a result the Minister is of the opinion that following the fiscal rules and targets would be unduly harmful to the fiscal and macroeconomic or financial stability of the country.

Overview of International Public Sector Accounting Standards 24


Since Ghana has signed unto IPSAS, the regulatory framework for budget preparation in Ghana is not limited to laws of Ghana but also includes IPSASs 24. In this session, we will devote our attention to an overview of the content of IPSAS 24, Presentation of Budget Information in Financial Statements.

Knowledge of the content of IPSAS 24 should be applied when preparing public sector budget.  Effective date Annual periods beginning on or after January 1, 2009.

Objectives of IPSAS 24

  • This standard requires a comparison of budget amounts and the actual amounts arising from the execution of the budget to be included in the financial statements of entities that are required to, or elect to, make publicly available their approved budget (s), and for which they are, therefore, held publicly accountable.
  • This Standard also requires disclosures of an explanation of the reasons for material differences between the budget and actual amounts.
  • Compliance with the requirements of this Standard will ensure that public sector entities discharge their accountability obligations and enhance the transparency of their financial statements by demonstrating

(a) compliance with the approved budget (s) for which they are held publicly accountable and

(b) where the budget (s) and the financial statements are prepared on the same basis, their financial performance in achieving the budgeted results.


  • An entity that prepares and presents financial statements under the accrual basis of accounting shall apply this Standard.
  • This Standard applies to public sector entities, other than Government Business Enterprises, which are required to elect to make their approved budgets publicly available. Definitions
  • Original budget is the initial approved budget for the budget period.
  • Approved budget means the expenditure authority derived from laws, appropriation bills, government ordinances, and other decisions related to the anticipated revenue or receipts for the budgetary period.
  • The final budget is the original budget adjusted for all reserves, carryover amounts, transfers, allocations, supplemental appropriations, and other authorized legislative, or similar authority, changes applicable to the budget period. Summary
  • An entity shall present a comparison of budget and actual amounts as additional budget columns in the primary financial statements only where the financial statements and the budget are prepared on a comparable basis.
  • An entity shall present a comparison of the budget amounts either as a separate additional financial statement or as additional budget columns in the financial statements currently presented in accordance with IPSAS.

The comparison of budget and actual amounts shall present separately for each level of legislative oversight:

– The original and final budget amounts

– The actual amounts on a comparable basis

– By way of note disclosure, an explanation of material differences between the budget and actual amounts, unless such explanation is included in other public documents issued in conjunction with the financial statements and a cross-reference to those documents is made in the notes

  • An entity shall present an explanation of whether changes between the original and final budget are a consequence of reallocations within the budget, or of other factors: – By way of note disclosure in the financial statements – In a report issued before, at the same time as, or in conjunction with the financial statements, and shall include a cross-reference to the report in the notes to the financial statements
  • All comparisons of budget and actual amounts shall be presented on a comparable basis to the budget.
  • An entity shall explain in notes to the financial statements the budgetary basis and classification basis adopted in the approved budget, the period of the approved budget, and the entities included in the approved budget.
  • An entity shall identify in notes to the financial statements the entities included in the approved budget.
  • The actual amounts presented on a comparable basis to the budget shall, where the financial statements and the budget are not prepared on a comparable basis, be reconciled to the following actual amounts presented in the financial statements, identifying separately any basis, timing, and entity differences:

– If the accrual basis is adopted for the budget, total revenues, total expenses and net cash flows from operating activities, investing activities, and financing activities

– If a basis other than the accrual basis is adopted for the budget, net cash flows from operating activities, investing activities, and financing activities

  • The reconciliation shall be disclosed on the face of the statement of comparison of budget and actual amounts or in the notes to the financial statements.


Welcome to Session 4. After going through the regulatory framework for budgeting in Ghana, we want to concentrate on the meaning of a national budget and what is contained in a national budget.

This is meant to enable you to be familiar with the State of Ghana’s budget and to enhance the understandability of the budget.


By the end of this session, you should be able to:

  1. a) Explain a national budget
  2. b) Discuss the main content of a national budget.

Now you can read on… 

National Budget National Budget is the budget for the state. It is a consolidation of the budget for the central government and budget for the local government. The budget prepared for the state could be a balanced budget (where the total revenue and total expenses expected to be received add up to be equal to each other), deficit budget (where the budgeted total expenditure exceeds the budgeted total income) or a surplus budget (where the budgeted total income is more than the budgeted to expenses).

The national budget of Ghana would typically include budgets of all MDAs and MMDAs and covers the period of one-year starting from 1st January to 31st December the same year.

Content of National Budget A cursory look at the various budgets of the state over the past two years reveals that these budgets exhibit some common features.

These features include a theme for the budget, introduction to the budget, assumptions underlying the current year’s budget, shows how the government would raise and spend money generated, macroeconomic performance for the previous year and outlook for the ensuing year, and policy initiatives which detail what government plans to do.

We will now consider the components of the content in detail.  Budget Theme The budget theme covers the objective of the budget for the ensuing year which sums up the main goal of the state for the period.

It also reflects the objective of the state, which is the target that the budget for the year seeks to achieve at the end of the period.

The Constitution of Ghana gives a framework for setting the theme of the budget and this is indicated in Article 36 of Chapter 6.


The State shall take all necessary action to ensure that the national economy is managed in such a manner as to maximize the rate of economic development and to secure the maximum welfare, freedom and happiness of every person in Ghana and to provide adequate means of livelihood and suitable employment and public assistance to the needy.

Constitution of Ghana (Chapter 6, Article 36).

Following this general framework, past and present governments have pursued goals that would lead to the achievement of the constitutional objective. Some of the budget themes for previous years and the current year are as follows.

The objectives of the state from 2012 to 2016 2012

– Infrastructural Development for Accelerated Growth and Job Creation 2013 – Sustaining confidence in the Ghanaian Economy.

2014 – Rising to the Challenge: Re-aligning the Budget to meet Key National Priorities.

2015 – Transformational Agenda: Securing the bright medium-term prospects of the Economy 2016 – Consolidating Progress towards a Brighter Medium Term.

The above budget objectives were based on the medium-term goal of ‘Ghana Shared Growth and Development Agenda’.

The Objectives of the State: 2017 to date 2017

– Sowing the Seeds for Growth and Jobs 2018

– Putting Ghana Back to Work 2019 –

At your various group discussions, analyses how the above objectives contribute to achieving the expectations enshrined in Article 36 of the Constitution of the Republic of Ghana.

Introduction to the budget This is the second component of the national budget. In the introduction, the finance minister explains the meaning of a national budget, discusses the global framework for preparing the national budget (which is mostly based on the 17 Sustainable Development Goals – SDGs – of the United Nations and the 15 specific objectives attached which are expected to be achieved by 2030), explains the budget process.

Budget Assumptions Budget assumptions could be explained as the expected macroeconomic framework that defines the bases for the budget estimates. In other words, they are the targets that the budget expects to achieve at the end of the fiscal year.

The 2018 budget has the following budget assumptions as of the macroeconomic framework for the period.

  • The overall GDP growth rate of 6.8 per cent;
  • The non-oil GDP growth rate of 5.4 per cent;
  • End period inflation rate of 8.9 per cent;
  • The average inflation rate of 9.8 per cent;
  • Fiscal deficit of 4.5 per cent GDP;
  • Primary balance (surplus) of 1.6 percent of GDP; and
  • Gross Foreign Assets to cover at least 3.5 months of imports of goods and services

Fiscal Policy Measures Fiscal Policies are broad decision guidelines to regulate government revenue generation and expenditure in order to facilitate economic development.

It covers taxes and their effect on the economy as well as the effects of changes in government expenditure. The budget of the state outlines revenue generation measures. These are the broad strategies put in place to ensure that enough revenue is generated to support the budget.

To enhance revenue generation activities in 2018, the government of Ghana indicated that it will among other measures;

  • make concrete changes in the tax policy framework, especially in tax exemptions
  • review the Suspense regimes to improve tax compliance;
  • implement the Excise Tax Stamp policy;
  • extend the requirement of producing Tax Clearance Certificates to large private sector contracts;
  • improve Property Rate collection; and
  • partially monetization of Ghana’s Gold Royalties The fiscal policy measures also cover expenditure management measures. This covers how the government plans to manage its expenses in order to ensure that costs are kept within levels that the state can contain.

To limit budget overruns, the government indicated in the 2018 budget that the following measures will be implemented.

  • a comprehensive review of payment systems;
  • rationalization and standardization of the remuneration of Chief Executive Officers (CEOs) and Boards of State-Owned Enterprises (SOEs);
  • general policy measures on the payroll;
  • rationalization of the administrative cost of public institutions;
  • leasing of Office Equipment and Motor Vehicles; and
  • rationalize Government Travels by introducing the use of corporate travel tool to consolidate official travel

Macroeconomic performance for the previous year and outlook for the ensuing year


In this section, the national budget discusses the sectorial achievements for the current year and outlines the targets for the general economy as well as the various sectors of the economy.

The main sectors that are covered include energy, transport, sanitation and water resources, education health, agriculture, trade and industry, lands and natural resources, works and housing, roads and highways, employment, and social protection.

Policy initiatives which detail what government plans to do Policies are broad decision guidelines that should ensure consistency in the treatment of recurring transactions Policies ensure that budget targets are achieved with the budget constraints.

In an effort to transform the economy and to create wealth and jobs, a number of policy measures were introduced in 2017.

The following were implemented in 2017:

  • abolished some taxes including the following: one per cent Special Import Levy imposed on imported raw materials and machinery;

excise duty on petroleum;

 import duty on specified vehicle spare parts; o percent VAT/NHIL on Real Estate sales;

 17.5 per cent VAT/NHIL on selected imported medicines not produced locally; and

 levies imposed on ‘kayayei’ by local authorities;

 replacement of 17.5 percent standard VAT rate with a 3 percent flat VAT/NHIL rate for supplies by retailers and wholesalers.

  • Parliament passed the Law establishing the Zongo Development Fund;
  • One District, One Factory policy was launched by H.E. the President on 25th August 2017 and Government completed technical, financial and commercial viability analysis of 462 proposals out of which 191 covering 102 Districts were selected for implementation. This is envisaged to generate about 250,000 direct and indirect jobs.

In 2018, the Government promised to implement the following measures, among others, to improve the standard of living of Ghanaians:

  • reduce electricity tariff in 2018 in an effort geared towards “keeping the lights on” at affordable rates to consumers.
  • improve revenue from lotteries although VAT on stakes and withholding tax on lotto winnings will be removed;
  • embark on an MDA Solar Rooftop Programme dubbed “Government Goes Solar” to reduce Government’s expenditure on utilities;
  • develop postal codes to feed into the National Identification System. About 4,000 National Service Personnel will be engaged to emboss digital addresses on all landed properties nationwide;
  • work with GET FUND to set up an Education Fund to enable Ghanaians to make voluntary contributions to support education;
  • adopt leasing as the main vehicle for financing the acquisition and use of government assets as part of efforts to reduce cost in the public sector;
  • establish the Nation Builders Corps (NBC) to create jobs;


Welcome to Session 5. In this session, we shall be looking at the budgetary process followed by the central government in the preparation of the annual budget. Recall that the central government includes the seat of government, Ministries, Departments and Agencies of the state.

Thus, the public sector budgeting processes discussed in this session are basically applied to the seat of government and MDAs.

Objectives by the end of this session, you should be able to outline and discuss the various stages followed in preparing budgets for the central government.

Now you can read on… 

Budget Cycle The budget cycle refers to the various stages that a public sector budget goes through in its life. The public sector budget life is divided into four main stages: preparation, approval, execution and monitoring, audit and evaluation.

The preparation stage covers the processes that the public sector go through in order to generate a budget for the state while the approval stage describes the stages that the prepared budget is taken through for it to receive the backing of the appropriate authorities before the budget is approved.

At the execution stage the budget is implemented by collecting the approved revenue from tax sources, non-tax sources, grants, etc. and spending on the approved programs and expenditure lines such as compensation for employees, goods and services, assets, etc.

The monitoring, audit and evaluation stage pf the budget is meant to ensure that monies that were purported to be generated for the state were actually generated for the state and expenditures paid for on behalf of the state were actually borne by the state. It ensures that the state got value for money in its spending.

The actual process of budgeting for the public sector of Ghana would be discussed in detail in sessions four and five during the discussions on central government and local government budgeting process.

Now, we turn our attention to the central government budgeting process

Continue Reading……


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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