Question Tag: Mid-Year Review

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  • 5 Marks

PSAF – Nov 2023 – L2 – Q5b – Public sector fiscal planning and budgeting

Explanation of public financial management terms including Mid-year Review, Virement, and Revised Budget.

b) Explain the following terms as applied to public financial management:

i) Mid-Year Review (2 marks)

ii) Virement (2 marks)

iii) Revised Budget (1 mark)

i) Mid-Year Review: The Public Financial Management Act 2016 requires the Minister to, not later than the 31st of July of each financial year, prepare and submit to Parliament a mid-year fiscal policy review. It provides an update of macroeconomic forecasts undertaken by Government; an analysis of the total revenue, expenditure and financing performance for a period up to the first six months of the financial year; a presentation of a revised budget outlook for the unexpired term of the financial year, and the implication of the revised budget outlook for the Medium-Term Fiscal and Expenditure Framework if necessary; and where necessary plans for submitting a proposed supplementary budget for approval by Parliament; and an overview of the implementation of the annual budget and of the budgets of covered entities. (2 marks)

ii) Virement: It refers to the reallocation of funds within the budget from one budget line to another budget line. It is the rearrangement of the budget provisions for subheads, items or sub-items or sub-sub-items within the ambit of a single head. Virement ensures that savings under one classification may be utilised to provide for extra expenditure under another without affecting the total funds to be disbursed from the head. The Minister may, on the request of a Principal Spending Officer, execute a virement in respect of an amount of money allocated to the covered entity of that Principal Spending Officer. (2 marks)

iii) Revised/Supplementary budget: Where in a financial year, it is found that the amount appropriated by the Appropriation Act is insufficient, or that a need has arisen for expenditure for a purpose for which no amount has been appropriated by the Appropriation Act, the Minister shall lay before Parliament for approval, a supplementary estimate, in the form of a Supplementary Appropriation Bill indicative of the amount required. (1 mark)

  • 6 Marks

PSAF – Dec 2023 – L2 – Q5b – Public sector fiscal planning and budgeting

Explain expenditure in advance of appropriation, mid-year review, and commitment in the context of public financial management in Ghana.

Explain the following processes or practices in public financial management in Ghana:

i) Expenditure in advance of appropriation
ii) Mid-year review
iii) Commitment

i) Expenditure in Advance of Appropriation
Expenditure in advance of appropriation occurs when the budget cannot take effect at the beginning of the fiscal year. In such cases, the President of Ghana is required to seek approval from Parliament to allow government spending before the budget is formally approved. This practice ensures that essential government functions continue uninterrupted. The authority for expenditure in advance lapses either when the budget is approved or three months after the end of the year, whichever comes first.

(2 marks)

ii) Mid-Year Review
The mid-year review is a process mandated by the Public Financial Management Act, which requires the Minister of Finance to prepare and submit to Parliament a mid-year fiscal policy review not later than 31st July of each financial year. The review includes an overview of recent macroeconomic developments, updates to macroeconomic forecasts, an analysis of total revenue, expenditure, and financing performance for the first half of the year, and a presentation of a revised budget outlook for the remainder of the year. The review may also propose a supplementary budget if necessary.

(2 marks)

iii) Commitment
Commitment in public financial management refers to the practice of reserving funds in the budget to cover expenditure decisions made by management. This ensures that when a decision is made to spend, the necessary funds are already allocated and available, preventing overspending. Commitments typically take the form of purchase orders, contracts, or other obligations. Under the Public Financial Management Act, all expenditures should be preceded by a commitment to ensure adherence to the budget, and failure to do so is considered an offense.

(2 marks)

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