Only K7/head allotted in budget
By FRANK ASAELI
THE National Government, through the Treasury Department, has been underpaying provincial and local level government (LLG) budgets since 1996 with an allocation of only K7 per head.
This was revealed at a presentation made on cost, capacity and performance by Dr Nao Badu, chairman and chief executive officer of the National Economic and Fiscal Commission (NEFC) yesterday morning at the Yacht Club.
Dr Badu said this was unlawful as grants were supposed to be calculated with the formula of K15 per head and K20 per head.
He said schedules in the organic law on provincial governments and local level governments (OLPGLLG) provide for mathematical formulas for calculating the grants.
Schedule 2.1 of the OLPGLLG stated that the minimum base figure for PG and LLG grant is K15 per head; schedule 3.1 stated that the base figure for provincial infrastructure grant is K20 per head; schedule 4.1 stated the minimum base figure for urban and town services grant is K20 per head; and schedule 5.1 stated that minimum base figure for LLG and village services grant is K20 per head, he said.
Dr Badu said OLPGLLG was passed in 1995 and came into force in 1996 and this under-payment has been occurring ever since.
he said the NEFC also made a study in 2006 on analysis from data in 2005 and then recommended that additional funding was needed from the National Government to supplement whatever was available in the provinces for basic service delivery.
“Provinces should reprioritise their expenditures and spend more on infrastructure maintenance, rural health and basic education. They (provinces) should spend less on administration,” Dr Badu said.
He said the country still lacked good governance and prioritisation of grants for basic delivery of services.
The current intergovernmental financing arrangements have contributed to declining services, poor maintenance of infrastructure and worsening education, health and economic participation indicators, he said.
Dr Badu said it was not an option to leave the system as it was, but the only solution was to put in place an alternative system that aimed at addressing these problems.
At the very least, it is essential that the distribution criteria for the grants change to take account of actual costs and revenues, he said.
“The current distribution method has resulted in gross disparities between provinces,” Dr Badu said.
However, as the grants are relatively small, it is likely that there will only be marginal improvement in service delivery in the majority of districts, he said.
“For a significant improvement in service delivery, one has to include all or a substantial portion of the provincial inland goods and services tax (GST) and royalties in the transfer pool,” Dr Badu said.
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