Gov’t unveils strategic plan to tackle arrears accumulation …finance minister announces enforcement measures

A new strategic initiative by the government focused primarily on averting the accumulation of arrears, is set to be implemented, with Finance Minister Dr. Mohammed Amin Adam announcing the enforcement of sanctions under the Public Financial Management Act and its regulations.

Arrears accumulation, a prevalent issue in numerous emerging and sub-Saharan African economies, has seen a concerning rise in recent years, posing a significant economic policy challenge. In Ghana, arrears represent a substantial portion of public expenditure, necessitating urgent reforms.

The government has rightly identified and prioritized addressing this challenge within the framework of the Public Financial Management (PFM) Act, 2016, Act 921, its regulations, and the comprehensive five-year Public Financial Management Strategy: 2022-2026.

Speaking at a sensitization and training workshop for Chief Directors and Heads of Covered Entities regarding the strategy for clearing and preventing spending arrears, as well as the evidentiary requirements for prosecution under the PFM Act, Dr. Adam emphasized the significant socio-economic ramifications of accumulating unsustainable arrears. Such accumulation adversely affects businesses and enterprises of all sizes, undermining financial sector performance.

The strategy to prevent arrears accumulation encompasses various measures, including the enforcement of sanctions under the Act, publication of compliance league tables, integration of GIFMIS purchase order clauses into national tender documents, and the full rollout of GIFMIS.

Dr. Adam stressed the importance of ensuring that all Covered Entities are well-informed about the current policy directives regarding arrears accumulation and the comprehensive strategy in place.

 It is essential to sensitize Principal Spending Officers and Directors responsible for day-to-day budget implementation on the strategy’s contents, particularly measures aimed at preventing further arrears accumulation.

The sensitization and training workshop aims to inform Covered Entities about the government’s policy to address weak commitment controls and expenditure management as outlined in the Strategy document. Additionally, it aims to educate representatives of Covered Entities on the evidentiary requirements for prosecuting officials who contravene the PFM Act, identifying breaches in commitment control, and outlining the government’s approach to prosecution.