GHANA: TRANSPARENCY OF BUDGETS/MILITARY SPENDING

UNCLAS SECTION 01 OF 02 ACCRA 002409

SIPDIS

TREASURY FOR OASIA/MDM J. FRANCO
EB/IFD/OMA L. GALLAGHER
AF/W FOR LAWRENCE JOHNSTON

E.O. 12958: N/A
TAGS: EAID EFIN
SUBJECT: GHANA: TRANSPARENCY OF BUDGETS/MILITARY SPENDING

REF: STATE 239929

The following responds to reftel request for a report
indicating whether Ghana meets the standards set out in U.S.
Transparency of Budgets legislation. Post obtained this
information primarily from officials from the Office of the
Auditor General. Answers provided below correspond with
questions posed reftel.


A. General Overview
--------------

1. Are military expenditures audited?

Deputy Auditor General Kwadwo Akowuah informs post that Ghana
audits military expenditures, and has done so since 1996.
For a long time the Ghana Armed Forces (GAF) and the Office
of National Security resisted submitting to an audit of
ammunition and aircraft, citing confidentiality and national
security reasons. However, in 2004, Parliament asserted its
constitutional authority and directed the Auditor General to
conduct the ammunition/aircraft audit. The Auditor General's
office is currently preparing to conduct this audit.


2. By whom are military expenditures audited?

The Auditor-General's representative located at the Ministry
of Defense audits the military expenditures on a routine
basis.


3. To whom are the audits reported?

The Auditor General's representative at the Ministry of
Defense prepares an annual report, which is reported to Unit
Commanders, the Chief Director of the Ministry of Defense,
Chief of Defense Staff, and the Minister of Defense. It also
goes to the Auditor General. The Auditor-General submits
annual audit reports on all Ministries, Departments, and
Agencies, including the Ministry of Defense, to Parliament.
(Note: although it does not appear that either Parliament or
the Auditor General publishes the annual audit for the
public, portions of it usually show up in the national media
and it is not difficult to obtains copies. End Note)


4. Are any of the people who receive the audits civilian
authorities?

Yes. The Minister of Defense and Parliamentarians are
civilian authorities. Also, the Auditor General's annual
report is provided to all Ministers on the Cabinet and to the
President -- all civilians. The auditors are also all
civilians.


5. Is there an existing framework for conducting annual
audits of military expenditures?

Yes. The Auditor-General's representative, who is
permanently stationed at the Ministry of Defense, audits the
expenditures on a routine basis.


6. Is there legislation or an instituted government policy
that requires annual audits of receipts that fund the
military?

Article 187 of Ghana's Constitution as well as the Audit
Service Act of 2000 (Act 584) provide the legal backing for
the auditing of all public accounts, including military
expenditures. The Auditor-General submits its reports to
Parliament, which then debates and, when necessary, appoints
a committee to deal with issues arising out of the report.

Prior to 1996, the GAF and national security authorities
would not acquiesce to audits of military and security
expenditures. However, Parliament asserted its
Constitutional authority and demanded the audits be allowed.
Since 1996, the GAF and national security authorities have
become more receptive to audits, and prescreened certain
employees of the Auditor-General's Department to allow them
to audit military spending. Although access was limited to
non-ammunition spending until 2004, the Auditor-General,
through Parliamentary action, now has unlimited access to
audit all military operations.

Annual audit reports to Parliament were in arrears of 2-3
years because the Audit Service lacked resources to conduct
the audits. The Audit Service mapped out a strategy to
complete all backlogs, and is currently auditing the 2003
budget.

(Note: Deficiencies do not appear to be intentional, rather
are due to lack of resources and capacity constraints, and
are not limited to the GAF audits. Recent improvements are
in part due to Parliamentary pressure. Parliament is
exercising more authority than in the past and is pressing
the Auditor General to improve quality and speed up audits.
End Note)


B. Military Budget, On-budget/Off-budget Revenues and Expenses
-------------- --------------
1) Does the country's budget include the armed forces and
security forces?

Yes.

2) To post's knowledge are there significant off-budget
military receipts? Are they audited?

Significant off-budget expenses are incurred on GAF's
participation in international (mostly UN) peacekeeping
operations, but the Auditor-General's Department could not
provide figures. However, the Audit Service recently
conducted audits for the first time on some of Ghana's UN
peacekeeping operations.


C. The Military Component of the National Budget
--------------

1) Are productive development objectives prioritized over
unproductive (e.g. military) objectives?

Yes. (Note: Military spending is relatively minor in Ghana.
It makes up less than one percent of GDP and about 2.8
percent of the budget. (Note: the combined budget for GAF
and Office of National Security comprises 1.1 percent of GDP
and 3.8 percent of the total budget. End Note) Ghana is
under tough spending restrictions under its agreements with
the IMF and World Bank. Poverty-related spending is a much
higher priority than military spending, and the IMF and World
Bank (and other donors) monitor Ghana's budget carefully to
ensure there is no unapproved transfers to the military
budget. End Note)

2) Is there a mechanism for debate over budget priorities,
such as through legislative assembly (e.g. Parliament)?

Yes. Parliament debates and approves the annual budget every
spring. In 2004, the budget for national security (including
the GAF) was thoroughly reviewed and discussed when the
minority party in Parliament was suspicious that the
government (and majority party) might divert the budget
increases allocated for 2004 to campaign activities. (Note:
Presidential and Parliamentary elections took place December
7, 2004. End Note)
LANIER