THE POLITICS OF THE BUDGET IN GHANA (as seen in 2004) Tony Killick

1. THE POLITICS OF THE BUDGET IN GHANA(as seen in 2004)Tony Killick Presentation to CABRI Seminar, Addis Ababa, November 2006

2. THE APPROACH • Start with understanding of history & environment. • Be dissatisfied with superficial “political will” explanations • The ‘Drivers of Change’ approach • General view: much African politics patronage-driven (“neo-patrimonial) • Implications of this, e.g. for policy-budget connections. Façade versus reality. Importance of penetrating this facade

3. OVERALL DoC VIEW OF GHANA • Ghana pulled back from disaster (1972-82); much progress made in last 20 years • Genuine democratisation; substantial & steady economic growth; liberalisation • But much scope for further improvement. Nature of political system the key. • Remaining weaknesses include: # poor environment for private sector # weak public service # inflexible structures # excessive centralisation

4. THE BUDGET AS FACADE The budget study. Findings: • Revenue side OK; concentrate on expenditures • See Policy Brief Box 1 on formal process. Note how closed it is. • Evidence on budget as ritualised façade: Large deviations from estimates Systematic biases Evidence of large leakages No apparent improving trend. Worse than earlier times • Cash budgeting reconciles with overall macro control – but it’s inefficient • Implications for policy-budget link

5. WHY TOLERATED? THE ACCOUNTABILITY PROBLEM Why no strong pressure for improvement? • Closed, non-transparent processes • Ineffective Parliamentary scrutiny • Inadequate public information There are improvements (consultation, information) but marginal, still Accra-based Opening-up has lagged behind general democratisation – “democratic deficit”

6. A POLITICAL-ECONOMY INTERPRETATION Ghana realities predicted by patrimonial model: • Closed to avoid too much scrutiny • Ritualised to reassure public + donors • Precedence given to protecting civil service jobs/pay over long-run development Problems related to poor state of civil service. Within patrimonialism, unfavourable political incentives for effective action on this (time-horizons; retrenchments; votes)

7. STRENGTHENING POLICY-BUDGET CONNECTION • Study’s overall drivers of change: more political competition; improving information; utilising diaspora; deepening civil society • For budget, reducing the democratic deficit, improving accountability: # Wider, institutionalised consultation # Improved information # Bringing in District Assemblies • Over-arching need for public service reform A question of political leadership, social mobilisation How applicable to other countries represented here?

8. TWO YEARS LATER… Some improvements. Treasury reform  improved access at District level. Computerisation = better reporting. More consultation but still informal. More info but often unhelpful. But…. # Still v. large variations (= façade) and leakages # Still largely a closed system – democratic deficit persists Parliamentary scrutiny still weak. # Still an anti-developmental bias against discretionary spending (wages & sals grew twice as fast as other in 06) # Still difficult to link policy priorities to actuals. Budget not policy oriented. MDAs don’t report by activity. MTEF largely ignored in implementation. Difficulties of establishing PR spending The public service reform situation – trying but evading key issues Overall: Situation largely unchanged; only marginal improvements