Public Spending at the District Level in Ghana

“Public spending may influence poverty alleviation objectives at several levels
including overall spending plans of government (aggregate fiscal policy), policy decisions funded in the budget and the flow of budgeted resources to Ministries, Department and Agencies (MDAs); frontline service delivery institutions whose activities directly impact the
development outcomes. As a starting point for analysis of the returns of public spending at the district level, this short report attempts to review the trends in financial inflows and outlays from District Assemblies (DAs) and link them to key development outcomes over the period
spanning 1994 to 2004.To minimize emphasis on traditional financial management system whereby control of resources over achievement of outcome-oriented objectives is stressed, Ghana introduced its MTEF in 1998 to enhance budgetary performance. The budget formulation phases of the
preparation of the MTEF successfully initiated a shift from the traditional incremental but fragmented annual budgetary exercise to one that has more of a performance focus (World Bank, 2001). The current system has more medium-term perspective and it holds the potential
to integrate decisions on recurrent and capital expenditure and sources of funding. It is also
hoped that the MTEF could offer support to the efforts to devolve authority within central
government sector ministries to district level so as to make the links between resources and
performance at the lower levels of government more clear and easy to evaluate. Ghana has so
far implemented the MTEF concept at the MDAs’ level but it is hoped that on-going
preparation for a more financial decentralized concept – composite budgeting approach within the MTEF framework – at the district level will extend potential gains from the MTEF approach to the local level of governance.”