Poverty Reduction Strategy Paper Annual Progress Report

This is the third Annual Progress Report on the implementation of the Ghana Poverty Reduction Strategy (GPRS). Both the budget and the GPRS propose to tackle issues including reduction in the domestic debt, reduction of inflation to single digits, increasing revenue mobilization, curtailing deficit financing, and rationalization of expenditure through effective monitoring. The disbursement of the District Assemblies’ Common Fund (DACF) has improved. The macroeconomic indicators show that targets set by the government have been achieved, which has led to a stable economic environment.


This is the third Annual Progress Report on the implementation of the Ghana Poverty Reduction Strategy (GPRS). Both the budget and the GPRS propose to tackle issues including reduction in the domestic debt, reduction of inflation to single digits, increasing revenue mobilization, curtailing deficit financing, and rationalization of expenditure through effective monitoring. The disbursement of the District Assemblies’ Common Fund (DACF) has improved. The macroeconomic indicators show that targets set by the government have been achieved, which has led to a stable economic environment.



This is the third Annual Progress Report (APR) on the implementation of the operational development policy framework of the country, the Ghana Poverty Reduction Strategy (GPRS).

The APR provides a structured review of the implementation of programme and projects and their impact on the socio-economic development of the country for a given year. The APR uses a set of indicators, triggers and targets, for monitoring and evaluating the achievements and impacts of the key policy and programme interventions undertaken by the government in 2004, which are aimed at reducing poverty.

Similar to the previous reports, policy recommendations are made for those areas where progress in 2004 has been ineffective. Policy recommendations are also made to address key weaknesses that have been identified in the implementation of the GPRS; which are important inputs to the production of the new four year (2006 – 2009) development policy framework for the country (the updated GPRS).

The 2004 APR has been compiled based on the summary of achievements during the year and provides:

  • ▪ the status of implementation of the GPRS communication strategy, Poverty Social Impact Assessments and the Strategic Environment Assessment;

  • ▪ the linkage between the 2004 Annual Budget and the GPRS;

  • ▪ the status of policy initiatives mentioned in the 2004 Annual Budget;

  • ▪ an overview of financial performance of District Assemblies;

  • ▪ an update on the set of core indicators agreed on in the GPRS M&E plan including additional indicators identified during the year;

  • ▪ an update on GPRS Medium Term Priority programmes and projects implemented in 2004;

  • ▪ the status of policy recommendations made in the 2003 APR;

  • ▪ the status of triggers and targets of the Poverty Reduction Support Credit (PRSC- 3)/Multi Donor Budget Support (MDBS) programmes;

  • ▪ the assessment of performance towards the attainment of the Millennium Development Goals (MDGs).

1.2 USE OF 2003 APR

Over the recent years there has been increasing demand for the results of monitoring and evaluation of the GPRS. This was especially so in 2004, since the 2003 APR was a key trigger that had to be achieved for Ghana to meet the HIPC completion point. Thus there was significant demand by the Government and Development Partners for the progress report, and indeed the process was successful.

The 2003 APR was also used to inform the 2005 Annual Budget and the process is reviewed in the next chapter (Linking the Budget to the GPRS).

The demand for the APR, from other stakeholders however (i.e. MDAs, RCCs, District Assemblies, Parliamentarians, CSOs, Researchers, Media, Public) was lower. During the preparation of this APR the causes for this were investigated, and the following reasons have been identified which have to be addressed in future APRs.

  • ▪ limited awareness about the contents and process of preparation i.e. document needs to be disseminated more widely

  • ▪ seen as a technical document i.e. simplified versions required

  • ▪ thematic perspectives need to be used to facilitate MDA durbars

  • ▪ Chief Directors are not fully involved in the process thus there is no sense of ownership

  • ▪ timing of its completion in relation to the national annual budget preparation cycle

  • ▪ document does not cover all sectors of the economy i.e. focus on GPRS medium term priorities

  • ▪ regional and district programmes and project interventions are not specifically assessed (i.e. data not disaggregated enough)

  • ▪ data validation process not thorough enough i.e. there is a need for process to cross check information submitted


The data used in the preparation of the APR was obtained primarily from sector ministries, departments and agencies (see references in Appendix). The APR also used data from a Participatory M&E exercise conducted by NDPC as well as Poverty and Social Impact Assessments (PSIAs) studies. An attempt was made to collect district and regional level indicators however, this proved quite difficult to obtain in a consistent manner. Thus district level disaggregated data on indicator achievements have not been included in this report. A result based M&E system needs to ensure that the various indicators & targets at the district and sector level are compatible both between sectors, and at the national level.

The challenges to data collection identified in the 2003 APR still persist. These include:

  • ▪ lack of feedback and incentives to motivate staff in the MDAs, Regions and Districts to institutionalise M&E activities;

  • ▪ inconsistencies in data between the regions and districts;

  • ▪ challenges of addressing the different M&E needs of different stakeholders;

  • ▪ inadequate resources for M&E at all levels.

Although the M&E process is deepening, additional resources and attention are required for the national, regional and district level M&E system to address these shortcomings. Given scarce resources and weaknesses in data collection systems, a “minimal approach” is recommended for GPRS M&E. It is more effective to collect data on a small set of core indicators and targets, which can reliably reflect annual progress as compared to collecting a lot of unreliable data.

The consultations for validation of data and policy recommendations were intensified during the preparation of 2004 APR. Linkages between MDA-PPME divisions and NDPC are being strengthened and discussions have started on how to increase linkages between sectoral reviews and the APR. The updated GPRS will incorporate an M&E system, which will ensure that various indicators and targets at district and sector level are compatible both between sectors and at the national level.

Development Partners (DPs) are also encouraged to harmonize their support to M&E efforts and to ease the burden on Ministries, Departments and Agency (MDAs) & District Assemblies (DAs) by limiting their reporting requirements, as they can use the GPRS M&E process as the major point of reference. For example, various DP programmes support capacity building on M&E at district levels and these can be harmonised.

To enable more stakeholders and DPs to adopt this approach, it will be crucial to ensure comprehensiveness, reliability, and timeliness of the GPRS M&E process. This requires additional effort by NDPC, the proposed GPRS M&E Technical Committee, RPMGs and NIPMGs, etc. in the follow up of the APR 2004.

To enhance ownership and commitment by key stakeholders in government to the M&E process, it is recommended that, the annual performance contracts, negotiated between the Chief Directors and the Head of Civil Service should include activities linked to relevant indicators of the GPRS M&E process.

1.3.1 Participatory M&E

Lessons learnt from the preparation of previous annual progress reports indicate that there is a need for empowering the citizenry to fully participate in the M&E process. Thus a participatory M&E exercise was undertaken by the NDPC at the end of the 3rd quarter of 2004. The exercise was undertaken to provide an opportunity for citizens to participate in the monitoring and evaluation of the GPRS. This was considered critical given some important findings in the 2003 Annual Progress Report, which included the following;

  • increase in childhood mortality in spite of increase resources to the health sector;

  • increase in access to safe drinking water alongside increase in incidence of water borne diseases, particularly guinea worm cases;

  • poor access to sanitation facilities;

  • slow progress in primary school enrolment; and

  • a widely held belief that Ghanaians have received limited benefits from reported macroeconomic growth and stability.

The primary objective of the survey was to obtain feedback from citizens about the extent to which the GPRS objective of enhancing access to basic services was being achieved at the community level, and to assess citizens’ experience of gains in the macroeconomic sector vis-à-vis their living conditions.

The services, which were surveyed included: provision of safe drinking water, provision of adequate sanitation facilities, access to health services and access to primary education. The survey sought information on: access to facilities/services, usage of facilities/services, quality of services, adequacy of services, reliability of services, cost/affordability of services, responsiveness of service providers, overall satisfaction with services, and the impact of macroeconomic reforms on households’ livelihoods.

In all 1000 households from four districts were selected for interview. The districts were randomly selected from a sampling frame of 110 districts stratified into three poverty panels:

  • Relatively non-poor districts- those with less than 40% incidence of household poverty.

  • Poor districts- those with 40% to 75% incidence of household poverty.

  • Very poor districts- those with 75% or more incidence of household poverty.

In addition, focus group discussions (FGDs) composed of citizens and providers of services were held to complement the survey results. The FGDs were designed to provide information to (a) validate and support the results of the survey and (b) identify areas of immediate concern to households.

A report was produced by NDPC: Citizens’ Assessment of the Provision of Basic Services and the Impact of Macroeconomic Stability and the results of the survey have been used in the relevant thematic areas of this report. An increasing number of NGO’s/CSO’s are also involved in various forms of citizens’ assessments. Feedback mechanisms to ensure adequate follow up need to be established for these initiatives.

1.3.2 Poverty Social Impact Assessments (PSIAs)

The APR used the results of the five PSIAs which were at different stages of completion. The PSIAs are:

  • ▪ Economic transformation of the agricultural Sector;

  • ▪ Tackling vulnerability and exclusion;

  • ▪ Electricity tariffs;

  • ▪ Enhancing capacity for pro-poor decentralisation was drafted in 2003 and was still in draft by end of 2004, to be finalized early 2005;

  • ▪ Petroleum pricing policy (was commissioned and drafted in 2004, to be finalized early 2005).

The purpose of the PSIA’s are to: analyse links between GPRS policy reforms, implementation and their poverty impact; review trade-offs between reform initiatives on basis of distributional impact and outcome on welfare; provoke public debate; promote positive effects of reforms under GPRS while minimizing adverse impacts; assess policy reform risks; review implementation of policies and suggest new directions for update of the GPRS.

All the PSIAs have helped to improve understanding of the potential linkages between policies and poverty impact, the need for pro poor targeting, and the importance of identifying specific poor groups, their needs, opportunities, risks, strengths and weaknesses. In all PSIA’s, analysis of impact of policy options on poverty and various poor groups, was the major focus. The gender dimension could have been stronger as this is generally an area where more information and more analysis of measures, is needed. Dissemination beyond the PSIA Technical Committees is in most cases yet to take place.

The outcome of the PSIA on Vulnerability was discussed during a workshop with various participants. The initiative has been taken by the Ministry of Manpower Development and Employment to draft a Social Protection Strategy, which will be finalized in 2005. Various DPs have incorporated definitions and issues of the PSIA in the development of their strategies and programmes for Ghana. Both the PSIA and the Common Country Assessment on Vulnerability are being used by the working group which is updating the section on Vulnerability in the GPRS.

The PSIA on Agriculture has also been the subject of various consultations. During a workshop at the end of 2004 with MOFA, NDPC, Cocoa Board, University of Ghana, and DPs (GTZ, DFID, CIDA) decisions were taken on the way forward. A Technical Committee has been set up by MOFA to formulate pro-poor strategies and to identify specific target groups. The Food and Agricultural Sector Development Policy (FASDEP) has been revised accordingly.

The PSIA on Electricity was finalized in the middle of 2004. There has been no dissemination of the PSIA findings.

The preparatory phase of the PSIA on Petroleum delayed and therefore no final version was ready as at the end of 2004, although public debate on petroleum prices has already started. The report and its recommendations should be able to help arguments linked to poverty reduction in the debates and policy decision making.

The PSIA on Pro-poor decentralisation was still in draft form by end of 2004. In 2004 various consultations took place on the draft. Finalisation and dissemination is expected to take place in 2005, as well as decisions on the follow up.

The follow up actions on conclusions and recommendations from the PSIA’s especially impact of pro poor policies need to be closely monitored. Common issues, which are reflected in all PSIA’s will be addressed in the updated GPRS (e.g. definitions and causes of poverty, vulnerability, majority of poor who are female, access to services and information, coping strategies of poor people, capacity at district level, and the need for pro-poor targeting).


The National Interagency Poverty Monitoring Groups (NIPMGs) which include stakeholders from MDAs, DPs and CSOs at national level, were actively involved in the preparation of the APRs. During the year meetings were convened to:

  • ▪ discuss the role of the NIPMGs;

  • ▪ nominate CSO/NGO representatives per thematic area (based on technical expertise and knowledge);

  • ▪ brief members on PSIAs; and

  • ▪ review the 60 core indicators of the GPRS.

The CSOs nominated representatives for the NIPMGs who now fully participate in all NIPMG meetings. The responsibilities and engagement of CSOs in M&E however, requires further attention. It is recommended that MLGRD and NDPC play an active role in engaging CSOs and defining and fostering working relationships at various levels, including the RPMGs and DPMGs.

Regional Poverty Monitoring Groups (RPMGs) were inaugurated in eight (8) regions in 2004. However, to fulfil their mandate, guidance from national level as well as additional technical and financial resources are required to ensure their role is effective and sustainable. RPMGs also need to prepare yearly work plans, so that gradual improvements can be made, based on a renewed mandate. Linkages and communication channels and procedures with both districts and national level MDAs and NDPC/MLGRD need to be clarified and enhanced. District Poverty Monitoring Groups (DPMGs) have not been set up due to both managerial and financial resource constraints.

As resources will always be scarce, monitoring at district level will need to focus at least at propoor budget expenditures, when M&E capacity is limited. New programs will be based on a minimum set of baseline data, to enable measuring progress against a limited set of GPRS indicators and targets. The gender dimension of poverty needs further elaboration in analysis, targets, implementation and M&E (including gender disaggregated data) at all levels. The updated GPRS will need to incorporate a gender sensitive M&E plan.


The M&E Technical Committee proposed in the GPRS M&E Plan has not been established yet. Greater coordination and harmonisation is needed for M&E activities between the core organisations at the central level (MOFEP, NDPC, OOP, MLGRD, GSS, and OHCS), with a focus on better information flows and incentives to improve GPRS monitoring and evaluation.

The Technical Committee will play a significant role in coordinating the efforts of the core M&E organisations in defining a new time-table and work plan for M&E activities thus ensuring the close linkage between sectoral reviews, the APR, and budget preparations. The updated GPRS will incorporate an updated GPRS ME plan with the required institutional arrangements and all ME requirements (human, financial and technical).


A key mechanism for increasing the demand for the results of M&E is the quality of communication with stakeholders. Effective communication of the GPRS will ensure that as many Ghanaians as possible, especially the poor, are aware of how the GPRS benefits them, and its role in the national development.

The GPRS Communication strategy developed in 2003 was implemented in 2004 with the following objective “To create a national understanding of the goals, objectives and strategies of the GPRS, and to ensure commitment to, and effective participation of communities, groups and individuals in the implementation of the GPRS”.

The GPRS and the APR 2003 were discussed extensively during the National Economic Dialogue in 2004. Another major event was the Ministerial Conference on the Strategic Environmental Assessment of the GPRS. The Development Dialogue Series continued in 2004, various stakeholders (traditional and religious leaders, youth groups, academics, CSOs, NGOs, DPs, DAs, and media) participated in a workshop on social accountability.

The Technical Steering Committee on GPRS Communication supported the training of Regional Trainers to create awareness and commitment on the GPRS and the mechanisms for consultations and feedback in regions and districts. The dissemination of the simplified version of the GPRS which was translated into seven local languages was completed in 2004. MDAs and the media-houses used the translated versions for their dissemination and sensitisation activities. Communication teams and media houses in the regions have been sensitised on the APR 2003 to prepare for radio panel discussions in all regions. The APR was disseminated to all 10 Regional capitals. Journalists and program managers from selected print media houses were also briefed on the GPRS and the APR.

The implementation of the Communication Strategy involved sensitisation of relevant Regional Officers of public institutions and the creation of Regional Communications Teams with the mandate to further disseminate the GPRS and APR (2003) to the district level. The Information Services Department of the Ministry of Information in collaboration with MLGRD conducted community sensitisation programmes on the GPRS and APR, using information vans in all districts in the country.

Some initiatives were taken to launch the NDPC website and some documents were posted. Two GPRS Bulletins were produced in 2004 on HIPC and on Fiscal Decentralisation.

The necessary feedback obtained from the implementation of the Communication Strategy has been provided to the CSPGs working on the GPRS update. The appendix presents an overview of the feedback on various issues of the GPRS and the 2003 APR from various fora and sources

The proposed GPRS Documentation Centre needs to be set up urgently by NDPC. The scope of work and targets of the Centre should reflect the needs of both decentralized and central institutions, and it would have to pro-actively collect main studies, reports, guidelines, minutes etc (including electronic versions). The Centre should have an active role in updating the GPRS website as well. Pro-active use of the NDPC disclosure policy is necessary to stimulate postings of documents and information on the GPRS website. The World Bank has since 2004 established a Public Information Centre (PIC) in Accra, to facilitate access of stakeholders to available development information (“sharing information and knowledge for a poverty free Ghana”). Close collaboration should be established between the GPRS documentation centre and the Public Information Centre.


Ghana is one of the first countries to make use of a SEA4 as a vehicle for reviewing and refining the Poverty Reduction Strategy. The objectives of the SEA were:

  • - To evaluate to what extent the environment was considered in the GPRS;

  • - To undertake screening of MDAs policies and District plans and related risks and opportunities for the environment;

  • - To propose recommendations for mainstreaming environment issues.

The SEA Report was finalized and approved in 2004. Specific recommendations are given for each of the thematic areas of the GPRS with suggestions on rural environment (primary source of more than 50 % of GDP), natural resource conservation, sustainable development, disaster prevention, “green” taxes and accounting, measures to protect the poor and the environment, root causes of lack of gender equity (include women’s access to land), environmental health and water, private sector, etc.

During the SEA process, consultations on environmental issues took place with MDAs, CSOs, private sector, parliamentarians, NGOs and DPs. Recommendations have been made for refining policies in order to give more direct focus on environment towards the attainment of sustainable development in the form of advisory notes to MDAs.

Examples of improvements as result of the SEA in the Ministry of Lands and Forestry:

Recommendation: Broadening the resource base of the wood industry through the increased utilization of the lesser known and lesser used species (e.g. bamboo, rattan). needs to be linked to various dimensions of poverty. Commitment to resource regeneration needed. If not, the policy would rather endanger those species and expose streams to evaporation and pollution/siltation.

Result: The Ministry has set up Bamboo and Rattan Regeneration Centres to train farmers to go into Bamboo and Rattan plantations.

Recommendation: Enhancing community based (collaborative) resource management is people, resource and management targeted, and can assist to improve the lot of the poor.

Result: Community Forest Resource Management Committees are in place.

One hundred and eight District Medium Term Development Plans were appraised on sustainability, and 660 district officials in DAs were trained on this. Districts have been encouraged to address environmental issues and have incorporated actions in their strategies and plans. Regional EPA- and Economic Planning Officers were trained as well, in view of their roles in planning and budgeting.

In May 2004 a Ministerial Conference (with participation of the Vice President, 4 Ministers and a wide range of stakeholders) took place, following various regional conferences, to debate the SEA findings and recommendations. The Vice President expressed government commitment to the SEA process being incorporated into the national development planning process. The following recommendations were made:

  • All sector policies to be subjected to SEA;

  • SEA principles, processes, findings and recommendations to be integrated in the GPRS and MTEF processes;

  • Sector and district guidelines to be infused with SEA principles at national and district levels;

  • Comprehensive sector wide SEAs are to be conducted.

The following products were finalized in 2004: The report (in three volumes: Executive Summary, Process Report and Contents Report); The Manual for officers in MDAs, DA’s and interested others (NGOs, CSOs, DPs); The NDPC guidelines on SEA and on the update of the GPRS; The Advisory Notes for MDAs; A pictorial brochure on the SEA process; A SEA poster. The printing and dissemination of the SEA products will be carried out in 2005, and guidance for the implementation of SEA tools will be provided by EPA at national and district level. EPA will also be directly involved in the monitoring of the follow up of the SEA recommendations and tools.

A SEA Manual was prepared to ensure that the key elements of SEA and sustainability principles are included the formulation, analysis and refinement of policies and programmes at both sectoral and district levels5. Each thematic group for the update of the GPRS will use the Manual, including the matrix to score policies and programs (on the effects on natural resources, social and cultural conditions, the empowerment of women, access of the poor, equity: benefits to be distributed equitably and should not discriminate against any groups, and effects on the local economy). A sustainability test is also included in the Manual. SEA Guidelines were also prepared which aim at MDAs to mainstream environment and integrate SEA principles in their Sector Medium Term Development Plans and M&E.

The strength of the SEA is that it has incorporated capacity and awareness building at both national, regional and district levels, is integrated in the NDPC planning process and, through its systematic approach, and provides an example for assessment of other governmental policies. It brought to the fore in a practical way the crucial link between poverty and environment in the drive towards poverty reduction.


Table 1.1 below shows a summary of the key recommendations made in APR 2003 on GPRS monitoring and evaluation.

Table 1.1:

Recommendations in APR 2003 on GPRS Monitoring and Evaluation

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Table 1.2 below shows a summary of the progress made so far on the GPRS core indicators.

Table 1.2:

GPRS Core Indicators

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Note for Table1. The GPER is calculated from EMIS census returns. As the return rates for target groups vary by year (94% for 2002-03 and 95.5% in 2003-04), direct year on year comparison is compromised. The GPER figures in the Table have therefore been scaled up to 100% for all years presented to provide a more accurate and less variable data for assessing education performance.2. The GPER figures in Tables 5.3 in the 2003 APR are consequently amended.3. To discern trends in the intermediate indicators of immunization coverage and supervised deliveries, data from the MOH is used here. The levels may not therefore be the same as those of 2003 GDHS which informed the 2003 APR



The 2002 and 2003 Annual Progress Reports discussed the extent to which the Budgets reflected the policy thrust of the GPRS. This was to give an indication of whether government is persistent in its poverty reduction strategy and whether resources are allocated appropriately. This part of the 2004 Annual Progress Report looks at whether the 2004 Budget reflected the thrust of the GPRS, and the actual discretionary expenditures of 2004.

The assessment of the consistency of the budget with the GPRS will be from the perspective of:

  • The budget process;

  • The extent to which the macro-framework provided by the budget was consistent with the GPRS;

  • The distribution of total budgetary allocations;

  • Sectoral distribution of Government of Ghana’s (GoG) resources;

  • Distribution of donor allocations

  • The distribution of expenditures by item of expenditure (i.e., personnel emoluments, administration, service, and investment).

  • The extent to which government expenditures were allocated for poverty reduction programmes and projects.

The Budget Preparation Process and Use of GPRS

In the preparation of the 2004 Budget, several activities were undertaken to link the budget to the GPRS:

  • Workshops were organised to improve MDAs understanding of the MTEP process as well as linking the GPRS and APR to the Budget;

  • Within each priority area, MDAs were required to show the progress made in achieving targets set in the GPRS and the remaining gaps up to 2005;

  • MDAs were required to incorporate poverty reduction policies of the GPRS into their Strategic Plans.

  • The MDAs are reminded of the role of the GPRS and APR at the budget preparation stage and the inclusion of the GPRS programmes and projects in their budgets;

  • The NDPC is represented at the budget preparation stage by the Director-General. He/She ensures that the GPRS and the Annual Progress Report are considered in the budget preparation.

  • The Annual Progress Report monitors the implementation of the GPRS. It is linked to the Budget through the policy initiatives recommended in the report which are meant to be implemented by the MDAs;

  • In the 2004 Budget, resources allocated to the Social Sector were increased in response to recommendations from the APR to the extent that the GPRS target of 34.3% in Social Sector allocation was increased to 38.8%.

The Macroeconomic Framework of 2004 Budget and the GPRS

The 2004 Budget was driven by the underlying economic framework of the GPRS:

  • increasing revenue intake to accommodate increased poverty-related spending and accelerated development;

  • strengthening public expenditure management; and

  • using an optimum mix of appropriate fiscal and monetary policies to impact positively on macroeconomic targets including inflation.

The macroeconomic framework as provided in the budget is consistent with the GPRS targets (Table 2.1). The macroeconomic objectives and targets proposed in the 2004 budget are similar to those of the GPRS with only a few exceptions. Both the budget and the GPRS propose to tackle issues which include:

Table 2.1:

Comparison of GPRS and 2004 Budget Macroeconomic Framework

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Source: MOFEP
  • Reduction of the domestic debt

  • Reduction of inflation to single digits

  • Increasing revenue mobilization

  • Curtailing deficit financing by pursuing a policy of zero net domestic financing

  • Rationalization of expenditure through effective monitoring

  • The GPRS target of 5% GDP growth has been exceeded in 2004 with a growth rate of close to 6%.

  • Although inflation rates have fallen significantly since 2000 the 2004 single digit target has not been realised and is unlikely that the 2005 target of 5% can be achieved. This can be explained by the fact that the inflation target in an election year was too ambitious, there were higher than expected foreign inflows, an the economy was coming out of the effects of the 2003 petroleum price increases.

  • Sectoral growth rates of output targeted by the GPRS have been achieved for 2004 and are likely to be exceeded in 2005.

  • Revenue targets have been achieved.

  • Stock of reserves have improved and targets exceeded.

The objectives of the GPRS include:

  • accelerated real GDP growth to 5% by 2005;

  • reduction in poverty from 39% to 32%;

  • improvement in basic infrastructure such as roads, water, sanitation and market access;

  • increase in the level of primary enrolment and education completion rates;

  • reduction in infant, child and maternal mortality and the incidence of infectious diseases;

  • improvement in governance and the efficiency of the public sector.

  • gender equity.

Five priority areas have been identified in the GPRS;

  • Infrastructure Development

  • Modernisation of Agriculture based on Rural development

  • Enhanced Social Services

  • Good Governance

  • Private Sector Development

The 2004 budgetary targets and policy direction included major policy initiatives and financial provisions for the attainment of these goals.

The Budget’s discussions of the performance of the various sectors of the economy in 2003 and the outlook for 2004 were conducted within the framework of the GPRS five priority areas. Provisions were made in the budget to fund these priority areas. (Appendix 8 of 2004 Budget Statement) There is a one-to-one link between budget expenditures and the MTP programmes and projects.


Table 2.2 shows the Functional Distribution of Total Discretionary Expenditure and Table 2.3 the distribution of total government discretionary expenditure for the 2001-2004 periods.

Table 2.2:

Functional Distribution of Total Discretionary Expenditure: 2001-2004 (%)

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Source: Appropriation Act and Budget Statements of 2001 to 2005
Table 2.3A:

Functional Distribution of Total GOG Expenditure 2001-2004 (%)

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Source: Computed from Appropriation Act and Budget Statements of 2001 to 2005

In 2003 the link was obvious when the GPRS 2003 targets are compared with the 2003 budget. There is correspondence between the broad sectors especially for Administration and Economic and Social Sectors.

Budget allocations to the Social Service sector have increased consistently since the beginning of the implementation of the GPRS. In 2003 and 2004 allocations to the sector exceeded the GPRS targets. The 2004 spending reported by CAGD (Table 2.3B) indicates that GoG spending in the Social Sector of 55.1% of MDAs discretionary spending exceeded the budget target of 48.1%. Additional funds constituting 28.5% of HIPC funds were also spent on the sector

Table 2.3B:

Budgetary and Actual GOG and HIPC* Spending 2004

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Source: Controller and Accountant General’s Department* This excludes payment of domestic debt of 301.4 billion

This consistent increase of resources to the Social Services sector translates into an increase in resources to activities directed to the poor, vulnerable and excluded reflecting the broad priorities of the GPRS. Within the sector there was a switch in resources to the Health subsector at the expense of education. Allocation to education in 2004 was slightly below that of 2003. The increase was in response to the recommendations of the 2003 APR.

Economic Services sector’s allocation has declined since 2002 declining by almost 50 percent from 18.02% to 8.9% which is below the GPRS target of 10.3%. Allocations to the agriculture sub-sector continued to decline. From 7.1% in 2001, it has declined to 3.03% in 2004. This decline in the agricultural sector’s share has serious implications for the poor to the extent that the poor relies on agriculture and related activities.

Infrastructure’s share has been below the GPRS targets. The allocation of 10.93% in 2004 was below the GPRS targets of 19.1%, although some HIPC funds (15.5%) were spent on the sector.

The Public Safety sector has been receiving increased allocation reflecting the importance of upholding the rule of law, public order and safety as major pillars of the GPRS with a slight increase in 2004 to 11.9% from the 2003 allocation of 11.52% and 4.3% of HIPC funds.

It must be noted that increased allocation to Social Services to provide relief and safety nets to the poor and vulnerable has crowded out resources to the economic services sector which supports wealth creation and sustained poverty reduction. There is a trade-off between wealth creation through augmenting the resources to agriculture and economic sectors to enhance growth and sustain poverty reduction and providing social services and relief to the poor.

Table 2.4:

Expenditures in Priority Areas as % of Total Expenditure

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Source: Computed from Table 1.4

Expenditures on the priority sectors as indicated in Table 3.4 declined from about 74.8% in 2003 to 70.45% in 2004. This could be attributed to the increasing share of Contingency item from 0.39% in 2001 to 7.08% in 2004; this is meant to serve as a cushion to possible shocks.

Table 3.4

Internally Generated Revenue Performance by Item from 2000 - 2004

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Government Spending on Poverty Reduction

Poverty reduction requires infusion of resources not only to the broad priority sectors, but also to programmes and projects in the areas known to be poor. The 2004 Budget had a strong linkage with the GPRS. Table 3.5 shows GOG poverty related expenditures in by sector in 2004. In spite of the financial constraints, poverty related activities were funded in full. Government addressed poverty by increasing its share of spending in the social sector and through direct actions to increase productive assets and basic services to the poor by spending 6441.39 billion cedis in 2004. Poverty reduction spending was in effect increased by 43.1% in 2004 over 2003 significantly greater than the planned 34.4% increase over 2003.

Table 3.5

Regional Totals of Internally Generated Funds by District Assemblies 2000-2004

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Figure 3.2:
Figure 3.2:

Internally generated revenue by district assemblies 2000 - 2004

Citation: IMF Staff Country Reports 2006, 226; 10.5089/9781451814941.002.A001

Expenditures on poverty reduction constituted about 28.1% of total government spending in 2004 and slightly exceeded planned expenditures of 27.97% for the year. Poverty related expenditures were largely directed at Basic Education, Primary Health Care, Agriculture, Rural water, Feeder Roads and Rural Electrification. The slight decline in the share of spending on primary health care can be explained by the increase in “other poverty” expenditure.

The pro-poor spending was supported by allocation of HIPC funds to the following priority areas of the GPRS:

  • ▪ macroeconomic stability -

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    301.4 billion was used for domestic debt servicing;

  • ▪ human resource development -

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    393.62 billion was released for various educational programmes and activities;
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    178 billion for the health sector and
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    179 billion for the provision, and
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    79 billion for water and sanitation;

  • ▪ private sector development -

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    677 billion was disbursed for activities in agriculture and infrastructure;

  • ▪ modernization of agriculture -

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    72 billion;

  • ▪ energy sector - SHEP was funded with about

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    228 billion;

  • ▪ good governance -

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    125 billion was disbursed for the 2004 elections.

Table 2.5:

Government Spending on Poverty Reduction

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Source: 2003, 2004, 2005 Budget Statements and Ministry of Finance and Economic Planning.

Other poverty expenditures include: Social welfare, Governance, Drainage, Human rights, Public Safety, HIV/AIDS, Vocational/Employable Skills, Road Safety, Environmental Protection and disaster management


As shown in Table 2.6 donor resources to sectors of the economy in 2003 were in broad conformity with the Medium Term Priorities of the GPRS. There was a significant increase in allocation to Administration higher than in 2002 and 2003 reversing the downward trend since 2001. The Ministry of Finance also experienced a little increase. But it was the Ministry of Health which was a significant beneficiary of donor expenditure, improving on the increase from 8.0% in 2002 to 9.9% in 2003 to 15.44% in 2004. Infrastructure which is the largest recipient of donor allocations experienced a decline from 51.5% to 43.49%. An important aspect of donor funding was the unexpected increase in actual expenditure to

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5.8 trillion which is more than double the budget target for 2004 of
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2.492 trillion

Table 2.6:

Functional Distribution of Total Donor Spending: 2001-04

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Source: computed from Appropriation Acts 2001-2004

Allocations to the Public Safety sector by donors declined from 1.6% to only 1.52% in 2004.

Utilisation of Discretionary Payments

Table 2.7 shows that although the sectoral allocations may broadly reflect GPRS priorities, personnel emoluments are still the largest component of discretionary expenditures. Its share of total discretionary payments from 43.7% in 2003 to 35.1% in 2004, although as a percent of GDP personal emoluments increased over the period. Allocation to Administration also increased as a percentage of GDP implying that these expenditures are growing faster than the growth in GDP.

Table 2.7:

Utilization of Discretionary Payments billion

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Source: 2004, 2005 Budget, Appendix Tables

A significant amount of funds which could have been used to improve investments were directed to financing the large increase in utility price subsidies which shot up from 2.15 in 2003 to 11.2% in 2004.

Investment allocation increased from 27.8% to 29.4%, the increase being mainly attributed to increased donor funding, although there was a little increase in domestic financed investment. The ratio of domestic financed investments to total investments in 2004 was 26.2%, with the rest being foreign financed. Although the dependence on donor funds has declined, it still accounts for a greater part of the nation’s investment expenditure thus rendering development efforts extremely susceptible to the vagaries of donor resource flows. To avoid the possibility of development agenda being susceptible to resource inflows, the Multi Donor Budget Support (MDBS) needs to be strengthened and more donors encouraged to join.

The Government needs to maintain an appropriate balance between expenditures on overheads (i.e. personnel emoluments and administrative expenses) on the one hand and expenditures on services and investments on the other.

Table 2.8 shows investment spending in each sector as a percentage of the sectors’ Discretionary Expenditure in 2004. Within each sector investment spending by government constitute a small proportion of the sector’s spending with the remaining spent on emoluments, administration and services. It is only in infrastructure (68.2%) that a large percentage of the spending is for investment. On the contrary, donor funding is mainly for investment, with for example 96.8% and 73.5% of donor funding in infrastructure and administration respectively being for investments.

Table 2.8:

Investments as a percentage of Sector Discretionary Expenditure in 2004

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Source: Computed from 2004 Budget Statement, Appendix Tables


Table 2.9 summarises the achievements of the 2004 Budget initiatives, and assesses whether these initiatives were implemented.

Table 2.9:

2004 Budget Initiatives and Achievements

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  • So far there is no gender specific budgeting and the little allocation to the Ministry of women and Children’s affairs is getting even smaller. This could be attributed to the limited experience with gender specific budgeting. The role of the Ministry of Finance and Economic Planning in this will be strengthened.

  • The MTEF process needs to be strengthened, a necessary requirement for linking medium term policy planning and the budget.

  • In the preparation of the 2006 Budget the link between the Budget and the Annual Progress Report will be further strengthened. This will be achieved through the circulation of the policy initiatives recommended in the 2004 APR to the Chief Directors and the PPMEs of the MDAs These policy initiatives need to be known well in advance by the MDAs so that they can be budgeted for.


This section examines the performance of districts with regard to major sources of funding. It includes a review of DACF, HIPC fund, and Internally Generated Funds and how these were utilised.


Funding for the execution of district development plans come from a wide number of sources. The major established sources however remain:

  • ❖ GoG subvention to districts for salaries and other administrative expenditure

  • ❖ District Assemblies’ Common Fund, (DACF)

  • ❖ GOG funds through MDAs

  • ❖ HIPC relief fund

  • ❖ Development Partners: (EU, CIDA, DANIDA, UNICEF, GTZ/KfW, AFD, DFID, JICA, USAID, WB, etc.)

  • ❖ Internally generated revenue of the Districts

  • ❖ NGOs (WVI, ADRA, CLIP SFL, … etc.)


Data for assessing the relative strengths of all the sources of funds to the Districts are not readily available and not easy to disaggregate from financial returns submitted by the districts. However, data for analysing DACF has been obtained principally from the DACF Administrator’s Office, the MLGRD and from the districts. Data on the internal revenue generated by districts has been obtained from the MLGRD while information on allocations from the HIPC Fund to MDAs and districts has been supplied by the Controller & Accountant General’s Department, CAGD. Other data and information for this part of the APR has been gathered from RPCUs and the DPCUs.

The institutional arrangements between the NDPC, the RCCs/RPCUs and the District Assemblies/DPCUs for monitoring are still weak. Regional Poverty Monitoring Groups (RPMG) were inaugurated in 8 regions in 2004. The RPMG were assigned roles including that of establishing District Poverty Monitoring Groups but due to the lack of resources RPMGs have not been functioning. This makes the collection of data from the regions and districts difficult and not harmonised. When RPCUs and their Regional Poverty Monitoring Groups are performing their roles effectively, they should routinely forward data and information to the NDPC and not have to be requested to do so; DPCU/District Poverty Monitoring Groups in turn should routinely supply information and data to the RPCU.

However in the year 2004, a significant and commendable step was achieved with regard to decentralised M&E in the Upper East region. The RPCU together with all six districts in the region and technical support from a development partner completed Monitoring Designs for their District Medium Term Development Plans (DMTDP) which are based on the thematic areas of the national GPRS. The implementation of GPRS/DMTDPs will be more effective when everyone knows what objectives have been agreed on and what indicators will be used to measure progress. The monitoring plans were therefore designed based on each district’s DMTDP. Each district held consultations with stakeholders in order to arrive at objectively verifiable indicators for the district. These individual district monitoring plans were collated at the RPCU and published into a booklet as a practical guide for easy reference.

The Designing of the Monitoring plans in the Upper East Region is an example of what is workable and what therefore the MLGRD should look for and put in the necessary policy and make resources available for other RPCUs to design monitoring plans.


Since the inception of District Assemblies, planning of district development has been decentralised with each district autonomously drawing up Medium Term Development Plans. The Local Government Act, 1993, (Act 462) and the Local Government Service Act, 2004 (Act 656) with Legislative Instruments, all serve to deepen decentralisation and to ensure that authority, power and functions have been devolved to DAs. However financial resources have not been fully decentralised; with some decentralised departments still holding on to their budgets at the centre.

As a result therefore, the MLGRD started to pilot Composite Budgeting in three districts in 2004 and the programme is to be extended to 22 more districts in the current year. All 138 District Assemblies are to be operating with composite budgets by the year 2007. Under this programme, decentralised departments are to submit their budget proposals to be harmonised into the District Assemblies’ budget.


The DACF (a portion of total national revenue allocated to districts) was to be increased from 5% to 7.5% in 2004. This has not been implemented and with the 2005 budget already under way it is not likely that this policy will take effect in 2005.

The Administration of the DACF continues to be guided by an approved sharing formula; utilisation by the districts is also by guidelines approved in 2003. Districts actually receive 90% of their allocations the remaining 10% is kept in a reserve fund. The Reserve fund is utilised as follows:

  • 5% is shared among parliamentary constituencies for use by MPs

  • RCCs are allocated 2.5%;

  • The DACF office is allocated 0.5% for its field operations and

  • 2% is kept as contingency

A summary of the guidelines issued to districts on how to apply the DACF is given below (these percentages refer to 90% of the district’s share). A review of the guidelines is in progress and new guidelines for the utilisation of the DACF are due to be issued in 2005.

Table 3.1

Guidelines for the Use of the DACF 2002-2004

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Source: DACF Administrator’s Office


Lodgements into the District Assemblies Common Fund (DACF) improved tremendously in 2004, with the payment of all four quarterly releases and the payment of two instalments of arrears. Thus disbursements from the fund to DAs which was characterised by delays and arrears, is now timely and all arrears dating back many years will soon be cleared.

Disbursements by the Administrator to districts amounted to

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857.172 billion in the year. This consisted of four quarterly releases to Metropolitan, Municipal and District Assemblies amounting to
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771,454,800,000. The balance of
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85,717,200,000 went to the MPs Fund, the Reserve fund, and for Administration. The Regional Coordinating Councils (RCCs) received
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21.43 billion of the DACF for monitoring the progress of districts in their regions. Analysis of regional totals shows that there is some consistency in the proportions of DACF being disbursed from the 2003 and 2004 figures. Details of these are contained in the following table:

Table 3.2:

Disbursements of DACF to District Assemblies in 2003 & 2004

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Source: DACF Administrator’s Office

Despite the substantial amount voted to the RCCs to monitor the use of the DACF, monitoring reports are not regularly sent to the Administrator of the fund or to MLGRD. Some RPCUs complain that the vote for M&E gets entangled in the RCC’s expenditure and is hardly ever released to them for monitoring. The DACF Administrator’s office, the Audit Service and the MLGRD should exercise more supervision over the use of the fund to ensure that it is in conformity with guidelines issued.


In the year 2004, returns on the use of the DACF shows that an amount of

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593,544,509,824 was utilized by districts for development projects/programmes compared to
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403,864,538,000 in 2003. Analysis of these returns shows major expenditure patterns as follows:

  • a large proportion (46%) of the fund was expended on Governance and Local Government Administration;

  • the proportion spent on Production & Employment including the Poverty Alleviation Micro- Credit loans to women groups was 23%;

  • Basic Education was 17% and

  • 12% went into providing Water & Sanitation.

This analysis does not relate solely to disbursements to DAs in 2004 but is based on the continuous use of the fund for the 2004 period. Expenditures were largely on GPRS social sector priority areas.

Table 3.3:

Summary of utilization of DACF during 2004 - Expenditure by sector

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Source: DACF Administrator’s Office
Chart 3.1:
Chart 3.1:

A proportional distribution of DACF Utilisation by sector

Citation: IMF Staff Country Reports 2006, 226; 10.5089/9781451814941.002.A001

The large proportion of the DACF spent on governance and administration is not in line with guidelines for utilisation. Under this category, expenditure items include: improvement of markets, counterpart funding for donor & community projects, electrification, investment, training, construction, printing, furniture, support for health campaign programmes, etc.


Data for compiling the internally generated fund (IGF) performance of districts were obtained from the Ministry of Local Government and Rural Development. Districts submit to the MLGRD, on a monthly basis, Trial Balances on their financial performance and a few districts were still outstanding in the submission of this data for the last two months of 2004. The internally generated revenue accruing to District Assemblies is made up of revenue from fees & fines, rates, lands, licences, investments and some other miscellaneous sources. The pie chart below shows the proportional contribution these items make to total IGF.

Chart 3.2:
Chart 3.2:

Percentage contribution to IGF by ITEM: 2004

Citation: IMF Staff Country Reports 2006, 226; 10.5089/9781451814941.002.A001

From the chart it is clear that the largest and most consistent source of IGF to DAs comes from fees & fines contributing an average of 32% of IGF over the period 2000 to 2004. This is followed by rates (23%), licences (15%) and lands (13%) in that order. The table below shows the yearly performance of DAs in revenue generation according to these items. Details of the contribution of these items to IGF by region, from 2000 to 2004 are shown in the Appendix.

Total IGF generated by all districts in the country increased in 2004 as shown in Table 3.4 and the corresponding bar chart below. This revenue totalled

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225.819 billion in 2004 compared to
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188.775 billion for 2003 and this represents an increase of 20%. Metropolitan and Municipal Assemblies generate more revenue than other districts. Total IGF figures by all districts in the country from 2000 to 2004 is shown in the table and the chart below.

The increasing IGF totals mask a declining revenue performance for some districts. Many DAs are inconsistent in the declaration of internal revenue generated. Accountability and transparency is lacking in this area of their operation. Management of IGF is called into question when this situation is weighed against past audit reports. These reports noted instances of revenue not accounted for, non-lodgement of revenue on time, suppression or loss of value books and un-acquitted payment vouchers.


Real growth in IGF has been calculated by comparing it with the Consumer Price Index (CPI) annual average growth rates. This analysis is to find out if the increasing figures for IGF are real. When compared to the nominal growth there was great growth in IGF in 2002 but this marked improvement was not built on the following year even though nominal growth showed a 32% increase in IGF.

Table 3.6:

Comparing nominal growth to real growth in IGF

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Figure 3.1:
Figure 3.1:

Real growth (%) in internally generated revenue

Citation: IMF Staff Country Reports 2006, 226; 10.5089/9781451814941.002.A001

In addition to poor revenue generation, districts spend large proportions of their IGF on administration and recurrent expenses, leaving little or none for development. Districts are therefore still depending to a very large extent on external sources to fund their development plans. Given that internally generated revenue in some districts have drastically and inexplicably declined, the MLGRD will have to investigate the causes of decline in revenues.


The IGF as a percentage of DACF shows a decline from 54% in 2002, to 29% in 2003, and to 26% in 2004. This indicates that revenue generated by central government increased at a faster rate than that generated by DAs. In sharing DACF to districts, performance in revenue generation is a factor in the formula for calculating each DA’s allocation. Declarations of internally generated funds by districts therefore have to be independently verified/audited given the inconsistencies that are usually observed by the MLGRD in the Trial Balances submitted.

Table 3.7

Comparing DACF to IGF 2000 – 2004

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  • ◦ DAs still use development funds for recurrent expenditures which is in contravention of the law guiding the use of the DACF

  • ◦ Management of the poverty alleviation loans (20% of the District’s DACF) is still not streamlined. Even though there are guidelines for granting the loans, these are not followed strictly and there is no serious recovery effort in many districts.

  • ◦ RPCUs complain of not getting funds for monitoring even though there is an allocation from the DACF for this purpose.

  • ◦ Failure of some RCCs to submit returns on the use of the Fund on time.

Some of the problems which audit reports highlighted in the past in the management of DA financial resources are still prevalent. Some of these are:

  • ◦ Un-acquitted payment vouchers

  • ◦ Missing value books and revenue not accounted for

  • ◦ Revenue collectors not bonded

  • ◦ Outstanding loans and advances to staff of the DA

  • ◦ Failure of Assembly officials to account for and retire cash imprest advanced to them in the course of performing their official duties etc.


Data on HIPC funds disbursements to MDAs was provided by the CAGD up to December 2004. The total amount transferred to MDAs in 2004 by the Controller and Accountant General is

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1,817 billion compared to 842 billion in 2003.


A substantial portion (16.59%) of the fund has also been used to defray the Domestic Debt. Apart from the allocation for domestic debt, the MLGRD and District Assemblies received the biggest allocation of HIPC funds in 2004 receiving 16.22% of the total sum disbursed. Other sectors that benefited most from HIPC funds in 2004 are Education (15.84%), Works & Housing [water & sanitation] (8.20%), Energy (6.39%), and Health (6.11%). These disbursements are in conformity with the Medium Term Priorities (MTPs) of government set out in the GPRS.

But, there are still no clear guidelines nor a budget followed in the disbursement of HIPC funds to MDAs and other beneficiaries. The disbursement procedure follows the issuance of an authorisation, in the form of a letter, from the Ministry of Finance to the CAGD to pay the beneficiary MDA.

Details of amounts disbursed by the CAGD from the HIPC Account to MDAs in 2004 are shown in the table below.

Table 3.8:

Disbursement of HIPC Funds in 2004 (Amounts in Cedis)

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Source: Controller and Accountant General’s Department