Transcript PRUDENT BORROWING FROM A DEBTORS POINT OF VIEW

MULTI -DONOR BUDGET
SUPPORT GHANA’S EXPERIENCE
7/16/2015
Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana .ID MEP09034
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THE MULTI-DONOR BUDGET SUPPORT.
Introduction
Background to the MDBS
Objectives of the MDBS
Achievements of the MDBS
How the MDBS Works
How Disbursements are made
Facts and figures
Institutional Frame work
Challenges
The future of the MDBS
Conclusion
7/16/2015
Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
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INTRODUCTION
Multi-Donor Budget Support (MDBS) is the name given to general budget support
in Ghana. General budget support consists of Development Partners (DPs)
transferring financial resources directly to the Government treasury to complement
Government’s own domestically generated revenues and facilitate the
implementation of the national budget and its associated public expenditure plans.
The MDBS group in Ghana is made up of the following eleven(11) DPs: the African
Development Bank, Canada, Denmark, the European Commission, France,
Germany, Japan, the Netherlands, Switzerland, UK and the World Bank.
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Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
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BACKGROUND
2002 - START OF NEGOTIATIONS AFTER CG MEETING
In 2003 Ghana signed a framework memorandum(FM) with nine DPs to govern the budget
support operations
Each year GOG and DPs negotiate and agree on a Policy Action Framework (PAF) document.
This document sets out how government will be assessed within the coming year. It outlines
the policy actions that government agrees to undertake as part of its growth and poverty
reduction process.
In July 2008, a new FM was signed this time including eleven DPs in support of the Growth
and Poverty Reduction Strategy II(GPRS II). The FM provides the guiding principles for
implementing budget support.
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Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
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OBJECTIVES OF MDBS
The primary objective of MDBS is to provide additional and predictable financial
resources to implement the poverty reduction initiatives of the Government in a :
1.Harmonized manner= to avoid parallel systems & a lot of missions and bilateral
consultation.
2. Using country systems= to avoid high transaction cost
3.Designing and executing development policies= in line with GOG priorities
4.and fostering domestic accountability and transparency= Improve PFM
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Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
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ACHIEVEMENTS OF THE MDBS
1. Donor funds can be predicted now, which has led to better planning and budgeting
2..There is quite improvement in the public financial management systems
3. There is a lot of improvement in the sector dialogue
4.Increased GoG commitments to agreed policy reform objectives
5. Lower transaction cost
6. Contributes to GoG development agenda through MDGs, and GPRS
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Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
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HOW MDBS WORKS
Policy Dialogue: GOG & DPs meet at the Sector Working Group level (SWG). CD of MOFEP co-chair this
meeting. There 15 SWGs
•Progress Assessment Framework (PAF): Discussions in the SWGs result in policy reform measures and
specific growth and poverty reduction objectives drawn from the GPRS II being jointly agreed as MDBS
targets. All of the targets from the SWGs are collated in a matrix or framework, called the PAF. Targets
are meant to be results-oriented, time-bound, specific, measurable, realistic and are achievable.
Assessment/Review: Every year, usually in May, DPs and Government assess progress against the PAF.
The outcome of this assessment informs the disbursement decisions of DPs.
Organisation: The MDBS group is currently made up of 11 DPs. This group is jointly chaired by the
World Bank and an annually revolving DP. There is also a vice co-chair, who will assume the DP co-chair
position after a year. The current DP co-chair is Switzerland, with Canada taking the position of vice cochair.
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Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
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HOW DISBURSEMENT IS MADE.
DISBURSEMENT OF FUNDS
Funds are disbursed in two tranches (Components)
The base tranche and
The performance tranche
THE BASE TRANCHE
The base tranche is disbursed between January to April after a positive IMF review of
the macro-economy
THE PERFORMANCE TRANCHE
The performance tranche is made following a comprehensive review of GOG
implementation of policy actions.
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Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
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DISBURSEMENTS – LOANS VRS. GRANTS
Percentage Distribution of Project and Progamme Loan and Grant Disbursements
2001
2002
2003
2004
2005
2006
End Sep,
2007
Project Loans
Project Grants
Programme Loans
Programme Grants
Total
34.81
27.72
18.68
18.79
100.00
50.02
19.68
6.74
23.56
100.00
37.53
19.04
20.16
23.27
100.00
34.09
29.14
12.60
24.17
100.00
36.28
33.38
17.51
12.83
100.00
36.58
25.84
20.78
16.80
100.00
38.45
22.84
15.49
23.22
100.00
Total Loans
Total Grants
Total
53.49
46.51
100.00
56.76
43.24
100.00
57.69
42.31
100.00
46.69
53.31
100.00
53.79
46.21
100.00
57.36
42.64
100.00
53.94
46.06
100.00
Total Project
Total Programme
Total
62.53
37.47
100.00
69.7
30.3
100.00
56.57
43.43
100.00
63.23
36.77
100.00
69.66
30.34
100.00
62.42
37.58
100.00
61.29
38.71
100.00
Aid Type
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Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
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PERCENTAGE OF GRANTS TO GDP &
DOMESTIC BUDGET REVENUE
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Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
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DONOR INFLOWS 2003-2007
MDBS DISBURSEMENT (2003-2007) IN MILLIONS OF USD
2003
2004
2005
Development
Partner
AfDB
Canada
Denmark
European Union
France
Germany
Netherlands
Switzerland
United Kingdom
World Bank
Aid Type
Loan
Grant
Grant
Grant
Grant
Loan
Grant
Grant
Grant
Loan
2006
2007
Committed Actual $ Committed Actual $ Committed Actual $ Committed Actual $ Committed Actual $
32.00
32.00
14.00
15.77
30.00
31.51
31.90
32.28
6.50
3.00
17.30
17.60
13.28
13.38
14.88
13.90
17.20
17.20
1.50
1.50
2.53
2.48
3.50
3.48
4.12
5.82
4.17
6.21
48.00
48.00
33.66
34.50
30.68
29.30
25.14
12.09
18.00
26.28
8.67
9.53
8.40
8.00
20.40
23.82
7.59
7.22
8.52
8.11
12.82
11.68
4.78
14.60
8.40
8.40
20.45
20.39
12.78
12.65
18.32
18.59
18.32
33.97
5.00
5.00
7.14
7.63
7.90
6.97
7.20
6.53
7.20
7.30
52.00
52.00
71.99
75.94
45.00
43.95
61.25
60.36
77.94
79.49
128.00
128.00
127.50
127.50
125.00
123.00
140.00
143.09
100.00
110.08
281.40
277.90
302.16
309.03
285.33
281.88
324.03
312.34
268.01
318.95
NB
Germany joined the MDBS programme in 2004
France joined the MDBS programme in 2005
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Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
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INSTITUTIONAL FRAME WORK- MOFEP
Report on
the
performance
of the loans
Maintain proper and
adequate
documentation of
all loans and
guarantee facilities
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Formulating
debt policy
of Gov. of
Ghana
MOFEP
(ADMD &
LEGAL
DIVISION)
Prepare debt
repayment
schedules and
monitor recovery
of loans and other
debts
Monitor
disbursement
inflows
Power (through
the Minister) to
commit GoG on
both Domestic
and External Debt
Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
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LEGAL FRAMEWORK
•
Clause 7: The Minister responsible for finance shall, at such times as Parliament may
determine, present to Parliament any information concerning any discrepancies relating to:a.
b.
The granting of loans, their repayment and serving;
The payment into the Consolidated Fund or other public fund of moneys derived from loans raised
on institutions outside Ghana.
Article 182 of the 1992 Constitution
•
Clause 1: The public debt of Ghana shall be charged on the Consolidated Fund and other
public funds of Ghana
•
Clause 2: For the purposes of this article, the public debt shall include interest on that debt,
sinking fund payments and redemption moneys in respect of that debt and the costs, charges
and expenses incidental to the management of that debt.
7/16/2015
Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
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MOFEP, CABINET AND PARLIAMENT
Reviews all public agreements and makes comments and observation on the agreement as it
deems fit prior to approval by parliament
Establishes substantive criteria to govern all government agencies or other prescribed bodies in
relation to the negotiation and conclusion of public agreements
Establishes recommended procedures for all government agencies or other prescribed bodies
in relation to the negotiation and conclusion of public agreements
LOANS
AGREEMENT
BOARD
MOFEP
Identifies sources of funding
EXTERNAL
CREDITOR
Negotiates the loan facility
Submits to cabinet and parliament for
approval
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CABINET AND
PARLIAMENT
Parliament derives its approval authority from the
Loans, Guarantees and Grants Bill and Article 181 of
the 1992 constitution.
Cabinet scrutinizes the loan or guarantee
request and approves it before it is laid
before parliament for approval.
Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
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CONTROLLER & ACCOUNTANT GENERAL’S
DEPT. AND AUDITOR GENERALS’S OFFICER
AUDITOR
GENERAL’S
OFFICE
Maintaining
accounting
records on loans
and guarantees
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General responsibility for auditing and reporting on the public
accounts prepared by the CAGD, and beneficiaries of public
funds.
CONTROLLER
& ACCT.
GENERAL’S
DEPT (PDI
SECTION)
Generation of
monthly, quarterly and
annual accounts which
also shows GoG’s debt
position
Provision of
instructions for
disbursement of
onlent loans
Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
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BANK OF GHANA
Report on GoG debt
TREASURY
DEPT
FDO
Verify repayment request from external creditors
BANK
OF
GHANA
Account for and report on debts including treasury bills issued on behalf of GoG
BANKING
DEPT
Make payments from and accept deposits into the Consolidated
Fund
Providing Guarantees for
public institution debts
upon request of the
Minister of Finance &
Economic Planning
Manage foreign credits and grants acquired by GoG and BoG for onlending to both
private and public institutions
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Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
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Coordination between the MOFEP,MDAs and Donors
MOFEP
BEFORE MDBS
DONORS
MDAs
AGRIC
EDUC
HEALTH
Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
ENV
Coordination between the MOFEP,MDAs and Donors
MOFEP
AFTER MDBS
DONORS
MDAs
AGRIC
EDUC
HEALTH
SECTOR WORKING GROUP
MDBS SECRETARIAT
GPRS
ENV
THE CHALLENGES
GOG loses a large proportion of expected ODA if it fails to meet agreed
performance criteria.
DPs on the other hand give up significant individual visibility than under their
respective development.
Further reducing the transaction cost.
Improved implementation of policy actions
Better ownership of the process by all government agencies
How to get the remaining donors to sign on.
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Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
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THE FUTURE OF THE MDBS
More efficient Public Financial Management System (PFM) to merit increase
in quantum of resources through the MDBS.
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Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
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CONCLUSION
Since its inception, MDBS has contributed approximately USD 2 billion to the
Government of Ghana budget
The MDBS constitute about thirty percent (30%) of total donor inflow to Ghana.
The remaining seventy percent (70%) is project type funding, sector wide
assistance(SWAP) and basket type funding.
There is no doubt that the MDBS mechanism is a significant improvement in
aid delivery.
Programme aid is a preferred option for any recipient country and when is
harmonized it is even better.
THE END
7/16/2015
Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana
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