Ghana - Joint Review of Public Expenditure and Financial Management

Abstract

This Chapter discusses Ghana's
 efforts in 2009 and 2010 to restore macro-economic stability
 through fiscal consolidation. It underlines that a
 substantial fiscal adjustment was undertaken, and yielded
 important results in terms of foreign currency reserves
 position, consumer prices and exchange rate stability. The
 adjustment mostly took the form of expenditure containment,
 and had initially a significant impact on overall economic
 activity through its negative impact on aggregate demand.
 This effect was compounded by the absence of relay from the
 private sector, which found it difficult to access credit
 from a domestic financial sector crippled with non
 performing loans, the latter originating for a large extent
 from the continued accumulation of public expenditure
 arrears. Meanwhile, Ghana improved domestic resource
 mobilization, though from a low base. This joint review of
 public expenditure and financial management is an attempt to
 fill this gap and re-focus attention on public expenditure
 effectiveness. The review aims at providing a comprehensive
 picture of public expenditure patterns. It focuses on a set
 of sectors, such as health and education, as well as on two
 important cross-cutting issues from a policy perspective,
 the wage bill and the fiscal decentralization.