World Bank Recommends Overhaul of Public Spending and Procurement Practices in Ghana
The World Bank has issued a critical advisory on enhancing Ghana’s fiscal sustainability, emphasizing the need for substantial improvements in public financial management, public spending efficiency, and procurement practices.
In its 8th Ghana Economic Update, the institution outlined that a detailed review of spending composition is essential, particularly to address the inefficiencies of costly and regressive energy subsidies.
The report advocates for implementing tighter expenditure commitment controls, better cash management practices, and bolstering budget credibility.
The World Bank specifically recommends the integration of all government accounts into the Treasury Single Account at the Bank of Ghana and commercial banks.
This move, alongside rigorous cash forecasting, aims to mitigate arrears accumulation and enhance overall cash management.
“Fast-track actions are needed to Integrate into the Treasury Single Account all ministries, departments, and agencies; local metropolitan, municipal, and district assemblies; and internally-generated-fund entities’ accounts in BoG [Bank of Ghana] and commercial banks. This action, together with effective weekly, monthly, and quarterly cash forecasts, will aid effective cash management and prevent the accumulation of arrears,” said the Bretton Wood Institution.
Given the historical accumulation of arrears, especially from capital expenditures, the World Bank suggests expediting the “Blanket Purchase Agreement” to manage multi-year commitments and contracts in alignment with Medium-Term Expenditure Framework ceilings, with an initial focus on the road sector.
Additionally, the report underscores the urgent need for reforms in the agriculture and energy sectors, which are pivotal both fiscally and economically.
It highlights the necessity for improved operational and financial performance at the Ghana Cocoa Board (COCOBOD) and the Electricity Company of Ghana (ECG) to restore their profitability and financial viability, thereby alleviating the fiscal burden and contingent liabilities these sectors impose.
“Given the fiscal burden and contingent liabilities emerging from agriculture and energy sectors and role they play in the economy, it is also key to substantially improve COCOBOD’s [Ghana Cocoa Board] and ECG’s [Electricity Company of Ghana] operational and financial performance to restore profitability and financial viability”, the World Bank added.
