2017 BUDGET IMPLEMENTATION INSTRUCTIONS

[Pages:25]In case of reply the number and date of this letter should be quoted

Our Ref. MOF/PFM/04/1 7 Your Ref. No.

REPUBLIC OF GHANA

MINISTRY OF FINANCE P. 0. BOX MB 40 ACCRA

ma,f , 2017

ALL HONOURABLE MINISTERS MINISTRIES/DEPARTMENTS/AGENCIES

2017 BUDGET IMPLEMENTATION INSTRUCTIONS

Following the passage of the Appropriation Act, 2017, (Act 945) by Parliament, the Ministry has issued the Budget Implementation Instructions in accordance with the PFM Act 921 to guide all Ministers (Principal Account holders) and Chief Directors (Principal spending officers) in the implementation of the budget.

2. The Instructions provide information on the procedures for the expenditures in relation to Compensation of Employees, Goods and Services and Capital Expenditures.

3. In line with the provisions in the new PFM law, colleague Ministers are kindly requested to note especially the following;

a. Compensation The policy of Net recruitments is still in place for all MDAs except Education and Health Ministries.

b. Capital expenditure In accordance with section 33 of the PFMA, all multi-year contracts for any project must first seek clearance with the Ministry of Finance to ascertain fiscal space and available funding for outer year commitments. This is to avoid over commitments, delayed payments of projects and arrears buildup.

c. Issue of Purchase Order under the PFMA 921 It is an offence to issue any purchase order outside the GIFMIS system or any other electronic platform in use by Government.

d. Externally Financed Projects In view of our debt levels, there is limited space for external financing of the budget. However, other areas can be explored for infrastructure financing that will not directly impact on the public debt levels. This includes the use of

Public Private Partnership (PPP), Build Operate Transfer (BOT) and other interventions. However, Government is currently not in a position to provide any form of financial support including guarantees. In this regard, MDAs are to ensure that all PPP arrangements initiated are commercially and financially viable and will not require Government financial support.

e. Internally Generated Funds That the new earmarked law is in force and therefore the provisions on the IGFs will be implemented.

f. Reporting Chief Directors are required to provide quarterly reports of budget implementation to the ministry for onward submission to Parliament in accordance with Section 30 subsection 3.

g. All State Owned Enterprises, are required by section 93(1) of the PFMA to submit a 921 Financial Plan for the year through the Sector Minister to the Ministry of Finance.

4. The detailed instructions are attached for the attention of all public officials especially Chief Directors, Heads of Institutions, Directors PPME and Directors of Budget and Finance.

5. For clarifications and further explanations please call the following numbers 0501290134, 050407947, 0202030359, 0244811257.

6. Thank you.

K N R ATTA MINISTER

Cc: The Executive Secretary to H.E The President, Jubilee House

The Chief of Staff, Jubilee House The Hon. Deputy Ministers, MOF The Head of Civil Service All Chief Directors, MMDAs The Head of Local Govt Service The Director of Budget, MOF The Controller & Acct. General The Auditor-General All Heads of Departments/Agencies All Regional Coordinating Directors All Directors of PPME All Regional Budget Officers

REPUBLIC OF GHANA 2017 BUDGET IMPLEMENTATION INSTRUCTIONS

MINISTYR OF FINANCE, 2017

2017 BUDGET IMPLEMENTATION INSTRUCTIONS

Table of Contents

1.0 INTRODUCTION ..................................................................................................................................................... 3 2.0 MDAs MONTHLY WORK PLANS AND BUDGET REQUIREMENTS........................................................................... 6 3.0 REQUESTS FOR RELEASE OF FUNDS ...................................................................................................................... 6

3.1 COMPENSATION OF EMPLOYEES...................................................................................................................... 6 3.1.1 Payment of Salaries................................................................................................................................... 6 3.1.2 Non-Salary Related Allowance .................................................................................................................. 6 3.1.3 Categories 2 & 3 Allowances..................................................................................................................... 6 3.1.4 Financial Clearance .......................................................................................................................................... 7 3.1.5 Improving Payroll Management ...................................................................................................................... 8 3.1.6 Validation of Staff Salaries ........................................................................................................................ 8 3.1.7 Recruitment and Promotion Related Arrears .................................................................................................. 9 3.1.8 Savings in Compensations Vote ................................................................................................................ 9

3.2 GOODS AND SERVICES .................................................................................................................................... 10 3.2.1 Releases for Foreign Travel Expenses ..................................................................................................... 10 3.2.2 Medical Treatment.................................................................................................................................. 10 3.2.3 Utilities .................................................................................................................................................... 10 3.2.4 Property Rate and Ground Rent Payment .............................................................................................. 11 3.2.5 Annual Subscriptions to International Organisations ............................................................................. 11

3.3 CAPITAL EXPENDITURE (CAPEX)...................................................................................................................... 11 3.3.1 Format for Requests for Capital Expenditure ......................................................................................... 11 3.3.2 Commitment of Approved Budget................................................................................................................. 12 3.3.3 Award of New Contracts ................................................................................................................................ 12 3.3.4 Specific Warrants for Continuation of Existing Projects ................................................................................ 12 3.3.5 Contract Extensions and Variations ............................................................................................................... 12 3.3.6 Multi-year Contracts ............................................................................................................................... 13

3.4 THE USE OF PURCHASE ORDER (PO) ............................................................................................................... 13 3.5 EXPIRY OF 2016 APPROPRIATION ................................................................................................................... 13 3.6 UNDISCHARGED COMMITMENTS AT THE END OF 2016..................................................................................... 13 3.7 PAYMENT OF COMPENSATION IN RESPECT OF LAND AND PROPERTY .......................................................... 13 3.8 SIGNATORIES TO APPLICATIONS FOR WARRANTS AND APPROVALS ............................................................. 14 3.9 ENFORCEMENT OF THE PUBLIC PROCUREMENT ACT..................................................................................... 14 3.10 FORMAL REQUESTS FOR PAYMENT FOR WORK/GOODS/SERVICES ............................................................... 14 3.11 OFFENCES AND PENALTIES UNDER PFM ACT 2016, ACT 921 ............................................................................. 14 3.12 CLAIMS AND JUDGMENT DEBTS ..................................................................................................................... 17 3.13 OFFERING LETTERS OF GUARANTEE OR UNDERTAKING TO CONTRACTORS...................................................... 17

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2017 BUDGET IMPLEMENTATION INSTRUCTIONS

3.14 LETTERS OF CREDIT ......................................................................................................................................... 18 3.15 LIFTING OF FUEL BY SECURITY AGENCIES ....................................................................................................... 18 3.16 DUTIES AND TAXES.......................................................................................................................................... 18 3.17 SOCIAL INTERVENTION PROGRAMMES .......................................................................................................... 18 4.0 COMPREHENSIVE RESOURCE ENVELOPE OF MDAs ..................................................................................... 18 4.1 Retention of Internally Generated Funds (IGF) ............................................................................................ 19 4.2 Processing of IGF Transactions ....................................................................................................................... 19 4.3 Gross Lodgement of IGF ................................................................................................................................... 19 4.4 Contracting of External Loans..................................................................................................................... 19 4.5 Public Private Partnership (PPP) ................................................................................................................. 20 4.6 Development Partner Funds........................................................................................................................ 21 5.0 REALIGNMENT OF STATUTORY FUNDS.................................................................................................... 21 6.0 VALUE BOOKS ............................................................................................................................................... 21 7.0 AWARD OF CONTRACTS IN FOREIGN CURRENCIES ............................................................................... 21 8.0 TAX EXEMPTIONS .......................................................................................................................................... 22 9.0 MONITORING AND REPORTING .................................................................................................................. 22 10.0 CONCLUSION................................................................................................................................................ 22

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2017 BUDGET IMPLEMENTATION INSTRUCTIONS

1.0 INTRODUCTION The 2017 Budget Statement and Economic Policy of Government was presented to the Parliament of Ghana on 2nd March 2017. After Parliamentary debate, the Appropriation was passed into law by the enactment of Appropriation Act, 2017 (Act 945) and given Presidential assent on 31st March 2017.

The Public Financial Management Act, 2016 (Act 921) (the `PFM Act') requires that roles and responsibilities for implementation of Fiscal Policy should be clearly established and defined in order to ensure positive outcomes in implementation. In addition, Regulation 149 of the Financial Administration Regulations, 2004 (L.I. 1802) requires the Minister for Finance to oversee the implementation of the national budget. The Minister for Finance, therefore, hereby issues, for compliance by all Ministries, Departments and Agencies (MDAs), this Budget Implementation Instructions ("Instructions"), for the 2017 financial year.

In 2017, the Budget will be implemented within the context of an IMF programme that is centred on fiscal consolidation and debt sustainability. Another critical component of the programme, is a requirement of zero financing from the Bank of Ghana to Government, as part of a monetary policy under an inflation targeting regime. These restrictions impose significant constraints in the implementation of planned programmes and operations in the Budget. To ensure that Government meets programme objectives, as well as, its fiscal and economic targets, it is essential that all MDAs/SOEs strictly comply with all aspects of these Instructions and prioritize their programmes accordingly.

These instructions apply to all the funding sources, including Government of Ghana (GOG) Funds, Development Partner (DP) Funds, and Internally Generated Funds (IGF).

MDAs are to note that it is imperative that they comply strictly with these Instructions in order to enable expeditious processing of release of funds for budgeted purpose. Failure to comply fully with these Instructions will result in delays of releases, and in some cases, may result in denial of releases.

The budget execution pathway indicating the business process for Goods and Services as well as Capex on GIFMIS is shown on Figures 1 and 2.

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2017 BUDGET IMPLEMENTATION INSTRUCTIONS

Figure 1: BUDGET EXECUTION PATHWAY (GOODS and SERVICES)

(Understanding the Business Process for Goods and Services on GIFMIS)

SERVICE PROVIDER / CONTRACTOR

BUDGET DIV. / MoF

Start

Budget Approved by

Parliament is Loaded

1

unto GIFMIS

MOF Issues Quarterly Budget Allo tments (on

GIFMIS) based on both 3 MDA and MoF Cash Flow

For ec as ts

6

Budget Releases (Warrants) are made by MoF through the GIFMIS

MDA CAGD

2 MDAs update their

Cash Flow Forcast and Submit to Ministry of

Fina nce

4

MDAs initiate procurement (tendering) processes.

N/B: Not all are automated on the GIFMIS System

5

MDAs make requests for Release of Funds (through

the GIMFIS)

7 8

MDAs Initiate Purchase Requisition on the GIMFIS

MDA processes payment to Supplier / Contractor (by EFT).

Record and approve invoice on GIFMIS for Payment

12

9

Receive goods or

10

serv ices or works

and record same on

the GIFMIS

End

Approve Purchase Order (PO) on the GIFMIS

11

CAGD transfers (by EFT) amount payable to MDA s

Sub-CF account

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2017 BUDGET IMPLEMENTATION INSTRUCTIONS

Figure 2: BUDGET EXECUTION PATHWAY (CAPEX)

(Understanding the Business Process for CAPEX on GIFMIS)

SERVICE PROVIDER / CONTRACTOR

BUDGET DIV. / MoF

MDA

CAGD

Start

Budget Approved by Parliament is Loaded

unto GIFMIS 1

MOF Issues Quarterly Budget Allotments (on

GIFMIS) based on both 3 MDA and MoF Cash Flow

Forec as ts

7

Budget Releases

(Warrants) are made by

MoF through the GIFMIS

2

MDAs update their Cash Flow Forcast and Submit to Ministry of

Finance

MDAs initiate

procurement

(tendering)

processes.

4

N/B: Not all are automated on the

GIFMIS System

6

Receive goods or services or works and record same on the

GIFMIS

9

5

MDAs Initiate Purchase Requisition on the GIMFIS

MDAs make requests for Release of Funds (through

the GIMFIS)

8

Approve Purchase Order (PO) on the GIFMIS

MDA processes payment to Supplier / Contractor (by EFT). 12

End

10

Record and approve invoice on GIFMIS for Payment

11

CAGD transfers (by EFT) amount payable to MDA s

Sub-CF account

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