Public Sector Financial Management Reforms in Developing Economies: Insights from Ghana

Abstract

Financial decentralization (FD) is key to bringing development closer to the citizenry. Therefore, there is a need to ensure the judicious use of funds mobilized by local authorities to bring about the desired level of development. To achieve this, governments of developing economies have to put measures in place to safeguard funds raised or provided to the public. One of such measures is the continuous reform of laws and regulations governing the mobilization and utilization of public funds. In Ghana, one of such Public Financial Management Reforms (PFMRs) is the Program Based Budgeting (PBB) which is aimed at ensuring the judicious utilization of public funds while meeting the demands of citizens. This study aimed at assessing the impact of PFMRs, with a special emphasis on fiscal decentralization in a selected Municipal Assembly in Ghana. The investigation used the mixed research method (quantitative and qualitative approaches) of data collection. Also, both primary and secondary data were used in this study. Primary data were collected through questionnaires and interviews, while secondary data were retrieved from the institution's financial records. The study results revealed that there exists a positive relationship between PFMRs and FD, and a strong linkage between PBB and Service delivery in Municipal Assemblies. However, the assessment of the impact of PBB on service delivery at the selected Municipal Assembly showed a moderate impact. The study also revealed an improvement in revenue mobilization and expenditure, while noticing that resource dependency remains a challenge at the selected Municipal Assembly. Further, the study identified non-adherence to budgetary allocations, poor budget monitoring, and control systems, and delays in the release of inter-governmental transfers as the challenges hampering the implementation of the PBB in Municipal Assemblies in developing economies (such as Ghana).