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2021-2024 Budget Preparation Guidelines

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2021-2024 Budget Preparation Guidelines 2021-2024 Budget Preparation Guidelines AUGUST, 2020 2021-2024 Budget Preparation Guidelines Table of Contents Acronyms and Abbreviations ...................................................................................... ii SECTION ONE: INTRODUCTION .................................................................................. 1 Medium-Term Development Policies ........................................................................... 1 The Economic Outlook of the Country (2021 Fiscal Framework) ................................. 2 SECTION TWO: INSTRUCTIONS FOR PREPARING THE 2021-2024 BUDGET ......... 5 Programme Based Budgeting (PBB) ........................................................................... 5 MDAs 2021 Budget Hearings ....................................................................................... 7 Revenue Management ................................................................................................. 7 Budgeting for Compensation of Employees ................................................................. 8 Budgeting for Goods and Services .............................................................................. 9 Budgeting for Capital Expenditure (CAPEX) ................................................................ 9 Other Budget Preparation Issues ............................................................................... 12 SECTION THREE: SPECIFIC INSTRUCTIONS FOR REGIONAL COORDINATING COUNCILS (RCCs) AND MMDAs................................................................................ 15 Revenue..................................................................................................................... 15 Expenditure ................................................................................................................ 16 MMDA Budget Hearings ............................................................................................ 17 Budget Submission/Approval ..................................................................................... 17 SECTION FOUR: CONCLUSION ................................................................................. 18 APPENDICES ............................................................................................................... 19 Schedule of Appendices ............................................................................................ 19 Appendix 1: Schedule of MDA Budget Hearings ....................................................... 20 Appendix 2: MDA Budget Ceilings / MTEF ............................................................... 22 Appendix 3: MMDA Budget Ceilings ......................................................................... 34 List of Tables Table 1: Summary of 2021 and Medium Term Fiscal Framework ................................... 3 Table 2: 2021 and Medium Term Fiscal Framework Total Revenue and Grants ............ 4 Table 3: 2021 and Medium Term Fiscal Framework Total Expenditures ........................ 4 Table 4: 2020 Budget Expenditure performance by economic items .............................. 6 i 2021-2024 Budget Preparation Guidelines Acronyms and Abbreviations ABFA Annual Budget Funding Amount CAPEX Capital Expenditure CoA Chart of Accounts CP Coordinated Programme of Economic and Social Development Policies DACF District Assemblies Common Fund DACF-RFG District Assemblies Common Fund Responsiveness Factor Grant DCMIS Development Cooperation Management Information System DPs Development Partners FDI Foreign Direct Investment GES Ghana Education Service GHS Ghana Health Service GIFMIS Ghana Integrated Financial Management Information System IGFs Internally Generated Funds MDAs Ministries, Departments and Agencies MMDAs Metropolitan, Municipal and District Assemblies MMDCEs Metropolitan, Municipal and District Chief Executives MoF Ministry of Finance MoUs Memoranda of Understanding NMTDPF National Medium Term Development Policy Framework PBB Programme Based Budgeting PFM Public Financial Management PIP Public Investment Plan RCCs Regional Coordinating Councils RMERD Revenue Mobilization and Economic Relations Division VAT Value Added Tax ii 2021-2024 Budget Preparation Guidelines SECTION ONE: INTRODUCTION 1. Pursuant to Article 179 (1) of the 1992 Constitution and Section 20 of the Public Financial Management Act, 2016 (Act 921) and section 122 of the Local Governance Act, 2016 (Act 936), the Budget Preparation Guidelines is issued to facilitate the preparation of the 2021-2024 Budget by Ministries, Departments and Agencies (MDAs) as well as Metropolitan, Municipal and District Assemblies (MMDAs). 2. This Guidelines has been developed to provide instructions on the processes and procedures for preparing the 2021-2024 budget. The budget ceilings to guide public entities that subsist on public funds in the preparation of their medium term budget is also provided. 3. With the year 2020 being an election year, in accordance with Article 180 of the 1992 Constitution and Section 23 of the Public Financial Management Act, 2016 (Act 921), a draft Budget Statement and Economic Policy will be prepared whilst a three month’s “Expenditure in Advance of Appropriation” (Vote on Account) is laid before Parliament by 15th November, 2020. The full Budget Statement and Estimates for the year 2021 will be presented by the first quarter of 2021. 4. Consequently, MDAs/MMDAs should put emphasis on the first three months’ budget of the annual estimate as this is what Parliament will consider and approve. 5. Honourable Ministers, Metropolitan, Municipal and District Chief Executives, Chief Directors and Heads of Institutions as well as members of the various budget committees are to ensure strict compliance to the guidelines. 6. The development of the Budget Guidelines was guided by the following: i. The President’s Coordinated Programme of Economic and Social Development Policies (CP) (2017-2024); ii. On-going policy initiatives and other strategic programmes of Government; iii. The Medium-Term National Development Policy Framework—Agenda for Jobs: Creating Prosperity and Opportunities for All (2018-2021); iv. The UN Sustainable Development Goals (Agenda 2030); v. The African Union Agenda 2063; Medium-Term Development Policies 7. The pre-occupation of Government in the medium-term will be to ensure protection of lives and sustenance of livelihoods with a view to returning the economy to strong and sustainable growth in the next three years to mitigate the impact of the COVID- 19 Pandemic. Government will continue to build strong macroeconomic fundamentals; sustain investments in productive infrastructure; develop a competitive world-class human capital base; promote an efficient well-capitalised financial sector; build a competitive business environment anchored on scientific and 1 2021-2024 Budget Preparation Guidelines technological innovation; and pursue a robust social protection system that guarantees an acceptable standard of living for all, consistent with the vision of the Ghana Beyond Aid and President’s Coordinated Programme. 8. The broad macroeconomic objectives to support the medium-term goal are to: stabilize, revitalize, and transform the economy; ensure restoration and sustainability of macroeconomic stability; provide supportive private sector environment (including promoting entrepreneurship) for domestic businesses and for Foreign Direct Investment (FDI) to thrive; build a robust financial sector to support growth and development; and deepen structural reforms to make the machinery of government work more efficiently and effectively to support socio-economic transformation. 9. The main thrust of macroeconomic policy in 2021 will focus on achieving at least the following objectives: ensuring stabilisation and returning the economy to the pre-pandemic fiscal stance; restoring economic growth to pre-pandemic growth path while protecting social spending; and revitalisating the economy to speed up the Ghana Beyond Aid agenda through turbo-charging the productive sectors and provide competitive import substitution, export promotion and diversification. The Economic Outlook of the Country (2021 Fiscal Framework) 10. Total Revenue and Grants is projected at GH¢56,956 million (13% of GDP) for 2021 based on the 2021 fiscal framework, and represents a nominal growth of 9.7 percent over the revised target for 2020. Total Revenue and Grants is expected to increase to GH¢71,358 million (14.2% of GDP) in 2022, reaching GH¢96,416 million (15.1% of GDP) by 2024. Of the Total Revenue and Grants, non-oil Tax Revenue is estimated at GH¢43,621 million (9.9% of GDP) in 2021, representing a per annum growth of 12.7 percent relative to the 2020 revised target. Non-oil Tax Revenue is expected to constitute about 76.6 percent of Total Revenue and Grants in 2021. 11. Again, Total Expenditure (including payments for the clearance of arrears) is projected at GH¢98,462 million (28.2% of GDP) in 2021, GH¢103,499 million (29.6% of GDP) in 2022, and GH¢116,872 million (33.4% of GDP) in 2024. Combined resources available for Goods and Services and Domestically Financed CAPEX amount to GH¢11,086.7 million (or 2.5% of GDP) in 2021, to GH¢14,234.7 million (or 2.8% of GDP) in 2022 and GH¢25,911.7 million (or 4.1% of GDP) by 2021. 12. Additionally, Compensation of Employees is projected to increase from GH¢26,656 million (6.9% of revised GDP) in 2020 to GH¢28,563 million (6.5% of GDP) in 2021 2 2021-2024 Budget Preparation Guidelines and further to GH¢32,572 million (6.5%
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