Ghana: Getting The House In Order: Parliament Passes Raft Of Bills In Ghana: Public Finance Bill And Long-Awaited Petroleum & Exploration Bill


A one-week extension of parliamentary sittings has seen a number of noteworthy bills passed into law in Ghana. Parliamentarians were originally supposed to rise on 29 July 2016 but during this extended one week period, a number of bills were passed, notably the Public Financial Management (PFM) Bill and the Petroleum Exploration & Production Bill. Is this a case of perfect timing or rather, a rushed job?

Public Financial Management Act, 2016

There is no doubt that Ghana needs a strong public financial management law to address the persistent financial leakages in the public sector purse. In a recent report by Africa-focused policy think tank Imani Africa, titled 'The Fiscal Recklessness Index', Ghana lost GHS 3,933,608,067.52 (US$ 994m) due to failure to adhere to the rules and regulations pertaining to debt management. The irregularities listed in the report include a disregard for financial administration regulations, a disregard for the Public Procurement Act, non-adherence to tax laws and procedures and a failure to strengthen controls 1. This report was based upon the findings of the last set of reports by the Auditor General (AG) which revealed significant financial irregularities in the public sector. For instance, the AG's Report on The Public Accounts of Ghana, Ministries, Departments and Other Agencies (MDAs) for the end of 2014, noted that "due to poor cash management and procurement practices, MDAs exhibited difficulties in payroll administration because of the prevalence of unearned salary payments" and that financial difficulties were also caused by "poor management of loans and well as poor collection of taxes due to the State". According to the AG, the financial negligence of MDAs cost the taxpayers GH˘252,786,587.43 (US$64m).

Crucially, the passage of the PFM Bill as well as other changes to bring about greater fiscal prudence were flagged up by the IMF as being key to ensure that the third tranche of the extended credit facility - part of the International Monetary Bill (IMF) conditionalities - is released. This amounts to US$116million 2.

Narrow Consultation

Commenting on the passage of the bill on Citi FM on 4th August, 2016, a former chairman of Public Accounts Committee (PAC) of Parliament, Mr Albert Kan-Dapaah, commended the government for the introduction of this bill but was displeased with the way in which the bill was rushed through parliament. According to him, the public and other stakeholders were not given an opportunity to make inputs; not even the Institute of Chartered Accountants Ghana (ICAG)- a statutory institution that trains accountants and PFM practitioners.

Petroleum (Exploration and Production) Law

Ghana discovered oil in commercial quantities in 2007 and began producing just three years later. According to Ghana's Minister of Energy and Petroleum, Emmanual Buah, a new legal regime is required to by in sync with an evolving oil industry, aimed at ensuring that principles of good governance, transparency and sustainable development in the petroleum industry are adhered to. It also seeks to address environmental related issues, local content and capacity building.

However, the new law has not been without criticism. Senior Law Lecturer at the University of Ghana, Dr Raymond Atuguba, notes that when the bill was initially set before parliament, there were over 100 amendments proposed, then after a subsequent reading, MPs put forward 45 proposed changes, which Atuguba portends, 'is indicative of a tacit rejection of the Bill by Parliament 3.


On the face of it, the passage of PFM bill into law signifies Ghana's readiness to protect the public purse. If adhered to, it should ensure efficiency in budget implementation thereby preventing unnecessary public debt that may accrue to government. Strict sanctions against public officials spelt out in the law are likely to deter public officials from breaching the law.

Again, the passage of the bill is likely to inform the IMF's decision to release the third tranche of the Extended Credit Facility (ECF) disbursement of about US$116 million. When this amount is released, the net international reserve will be cushioned, thereby strengthening the local currency.

For its part, the passage of the long-awaited Petroleum Exploration and Production Bill into law should ensure more transparency in the award of contracts in the oil and gas industry. However, questions do abound relating to the discretionary powers of the minister of petroleum in the award of contracts and the increase in minimum carried interest to government could well face some opposition from oil and gas companies.





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