1.0 Introduction:

The management of public funds has a direct impact on the day-to-day lives of Ghanaians since it affects our way of living as far as principal services like healthcare, education, infrastructure development and employment are concerned. The foundational legal framework for public finance management in Ghana is the Public Financial Management Act,2016 (Act 921), which was passed with the objective of addressing historical deficiencies in public finances and promoting discipline, transparency, and accountability in the management of the nation’s resources and is generally considered “one of the best in the world” legislatively. 

The main goal of the Act is to regulate public sector financial management within a broad macroeconomic and fiscal framework, clearly defining the roles and responsibilities of stakeholders, and implementing strict measures for accounting and auditing of public funds. This aims to uphold fiscal discipline, ensure efficient resource allocation, promote operational efficiency, and enhance overall transparency and accountability. 

Despite its globally renowned design, however, the Act’s functional impact has been weak and left Ghana’s Public Financial Management system vulnerable to abuse and expensive transgressions, constituting a source of great danger to the economic stability of the country. This conflicting combination of the potency of the law and its poor implementation says a lot about a fundamental fact: the problem is not with the Act itself but its persistent and effective implementation, which is something that any Ghanaian should understand in order to have a correct sense of public financial management and the direction forward towards improvement.

1.1 Why It Matters to Every Ghanaian

The PFM Act is not just for government officials and accountants—it is about ensuring public funds serve citizens. Here’s why it matters:

• Better Services:

The effective management as well as the transparent allocation of public funds ensures that they reach the sectors that matter most to the ordinary citizens. This translates into improved school infrastructure, well-equipped hospitals, paved and maintained roads and functional community projects that make daily life better.

• Reduced Corruption: 

By imposing strict controls and mandating frequent public disclosure, the PFM Act promotes a culture in which it becomes more difficult for individuals to steal or embezzle funds and get away with it. This deters corrupt practices and safeguards public resources.

• Citizen Participation: 

The need to release budget and fiscal reports provides the public with access to information essential to question, hold public officials accountable, and monitor that their money is being spent in accordance with public priorities.

2.0 Understanding the PFM Act (Act 921): A Comprehensive Framework for Accountability

The Public Financial Management Act (Act 921) goes beyond the broad purview of a typical financial rulebook as it is a comprehensive instrument of governance. Its framework combines fiscal policy with operational financial management and accountability systems at all levels of government to address the whole public financial management process. This comprehensive approach is essential in creating an environment where public funds are managed effectively and ethically.

The Act’s comprehensive scope is reflected in its structured provisions, which can be broadly categorised into several key pillars:

• Responsibilities and Roles for Public Financial Management: 

The Act meticulously defines the duties and accountability lines for key public officers, including the Minister of Finance, the Chief Director, the Principal Spending Officers, and the Controller and Accountant-General. This clear delineation of roles is fundamental to ensuring that responsibilities for public funds are unambiguous.

• Macroeconomic and Fiscal Policies: 

The Act lays down guiding principles and objectives for fiscal policy formulation, mandating the creation of a Fiscal Strategy Document. This section aims to embed long-term fiscal prudence into government planning.

• Budget Preparation, Approval and Management: 

It establishes rigorous procedures for the preparation and approval of annual budgets, outlines rules for multi-year commitments, and mandates performance reporting to track expenditure against plans.

• Contingency Fund and Debt Servicing: 

Provisions are included for managing unforeseen expenses through a Contingency Fund and for the responsible servicing of national debt, notably through the establishment of a Sinking Fund.

• Cash and Asset Management: 

The Act sets rules for the diligent management of government moneys and assets, including the implementation of a Treasury Single Account to consolidate government cash.

• Public Debt Management: 

It defines the functions of the Public Debt Management Office and sets stringent rules for government borrowing, emphasising parliamentary approval for terms and conditions.

• Accounts and Audit: 

The Act mandates requirements for financial statements, internal and external audits, and the establishment of audit committees to ensure thorough scrutiny of public accounts.

The holistic nature of the PFM Act, as captured in these pillars, reflects its role as an important instrument of governance rather than a set of fiscal regulations. The comprehensiveness implies that the effective use of the Act is most important to national growth and good governance in general. Its failure thus has extremely far-reaching consequences and not only affects financial integrity but also affects economic stability, the effectiveness of public service delivery, and the integrity of the democratic process in general. It is a system poised to facilitate the sustainable and transparent management of public resources, in line with Ghana’s 2022-2026 PFM Strategy, which is anchored on themes of consolidation and sustainability, around macro-fiscal frameworks, planning and approval of the budget, predictability of control, transparency in budget implementation, accounting and reporting through GIFMIS, and external audit and parliamentary scrutiny.

3.0 Challenges in Implementation

While the PFM Act has many strengths, challenges continue to hinder its full implementation.

• Political Interference 

In some cases, political interests shape how budgets are allocated or shield officials from accountability, undermining the Act’s principles.

• Weak Enforcement of Sanctions

Even though there are provisions to punish misconduct, sanctions are not always applied consistently, reducing their effectiveness as a deterrent.

• Capacity Gaps within MDAs 

Many government institutions still lack the trained personnel, technology, and systems needed to implement the Act’s provisions thoroughly.

• Limited Public Awareness 

A significant portion of the public remains unaware of the PFM Act or how to engage with it, limiting their ability to demand transparency and accountability.

4.0 How BudgIT Ghana is Helping

BudgIT Ghana remains committed to public education on matters of public interest. Our budget explanation, visualisation, and citizen forums serve to demystify public finance law and ensure accountability. Our Tracka project also enables citizens to track the execution of projects and seek transparency according to the tenets of the Act. Besides this, we work with civil society organisations, mobilise grassroots champions, and make access to and understanding of budget data easier for citizens. We also publish periodic research reports and policy briefs that identify gaps in the implementation of government activities and provide recommendations for enhancement. The mission of BudgIT Ghana is to enhance the democracy of Ghana by promoting a culture of transparency, accountability, and engagement of citizens.

5.0 Conclusion and Call to Action

The PFM Act is a powerful tool for good governance, but it only works when citizens, media, and civil society hold government accountable. Beyond simply knowing the law, we must demand consistent application, advocate for stronger enforcement, and engage with the budget process at all levels. BudgIT Ghana urges every Ghanaian to become a watchdog in their community, seek out public information, question leaders, and join networks that promote transparency. Together, we can build a system where public resources truly serve the people.Call to Action: Stay informed, speak up, share information with others, and join BudgIT Ghana in building a culture of accountability and transparency. Only through collective vigilance can we ensure public money works for the public good and the nation’s development.