MULTI -DONOR BUDGET SUPPORT GHANA’S EXPERIENCE 10/5/2015Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana.ID MEP090341

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 10/5/2015Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana2 THE MULTI-DONOR BUDGET SUPPORT.

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. 10/5/2015 Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana 3

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. 10/5/2015Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana4 BACKGROUND

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 10/5/2015Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana5

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 5. 10/5/2015Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana6

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 co- chair. 10/5/2015Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana7

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. 10/5/2015Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana8 HOW DISBURSEMENT IS MADE.

DISBURSEMENTS – LOANS VRS. GRANTS 10/5/2015 Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana 9

PERCENTAGE OF GRANTS TO GDP & DOMESTIC BUDGET REVENUE 10/5/2015Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana10

DONOR INFLOWS /5/2015Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana11

INSTITUTIONAL FRAME WORK- MOFEP MOFEP (ADMD & LEGAL DIVISION) Formulating debt policy of Gov. of Ghana Power (through the Minister) to commit GoG on both Domestic and External Debt Monitor disbursement inflows Maintain proper and adequate documentation of all loans and guarantee facilities Prepare debt repayment schedules and monitor recovery of loans and other debts Report on the performance of the loans 10/5/2015Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana12

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.The granting of loans, their repayment and serving; b.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. 10/5/2015Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana13

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. MOFEP, CABINET AND PARLIAMENT MOFEP LOANS AGREEMENT BOARD CABINET AND PARLIAMENT EXTERNAL CREDITOR 10/5/2015Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana14 Identifies sources of fundingNegotiates the loan facility Submits to cabinet and parliament for approval 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

CONTROLLER & ACCOUNTANT GENERAL’S DEPT. AND AUDITOR GENERALS’S OFFICER CONTROLLER & ACCT. GENERAL’S DEPT (PDI SECTION) Maintaining accounting records on loans and guarantees Generation of monthly, quarterly and annual accounts which also shows GoG’s debt position Provision of instructions for disbursement of onlent loans AUDITOR GENERAL’S OFFICE 10/5/2015Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana15 General responsibility for auditing and reporting on the public accounts prepared by the CAGD, and beneficiaries of public funds.

BANK OF GHANA TREASURY DEPT BANKING DEPT Providing Guarantees for public institution debts upon request of the Minister of Finance & Economic Planning FDO 10/5/2015Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana16 Report on GoG debtVerify repayment request from external creditors Make payments from and accept deposits into the Consolidated Fund Account for and report on debts including treasury bills issued on behalf of GoG Manage foreign credits and grants acquired by GoG and BoG for onlending to both private and public institutions

Coordination between the MOFEP,MDAs and Donors MOFEP AGRIC EDUC HEALTH ENV DONORS MDAs BEFORE MDBS Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana

Coordination between the MOFEP,MDAs and Donors MOFEP AGRIC EDUC HEALTH ENV SECTOR WORKING GROUP DONORS MDAs MDBS SECRETARIAT GPRS AFTER MDBS

10/5/2015Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana19 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.

10/5/2015Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana20 THE FUTURE OF THE MDBS More efficient Public Financial Management System (PFM) to merit increase in quantum of resources through the MDBS.

10/5/2015Presented By DABONE ATTA SNR: Head, GRANT/MDBS, MoFEP, Ghana21 CONCLUSION 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. 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. THE END