The New Statesman can confirm that the John Dramani Mahama-led National Democratic Congress government is indeed broke and has started withdrawing monies from the District Development Fund and proceeds from the Highly Indebted Poor Country Fund in order “to balance the books.”
This development has resulted in the halting of several projects in all districts across the country which required the use of funds from these two sources.
A source, who happens to be an Assembly Member at the Shama District Assembly, and who spoke to the New Statesman on condition of anonymity made this startling disclosure.
According to him, “All DDF and HIPC allocations in the districts have been taken back into the government chest. As a result, all projects awarded under DDF cannot be executed in all the districts.”
Sources at the Ministry of Finance have told the paper that the 2014 Budget presented by Seth Terkper has been thrown out of the window because projections made by the government were based on the cedi being pegged at $1 to GH¢2.20 throughout the year 2014.
However, with the $1 now trading at GH¢2.70, government’s projections have completely gone wrong, and as such government is now busying itself in trying to raise money to make up for the shortfall in its projections.
Thus, the DDF and HIPC funds have become targets for this revenue generation being undertaken by government. This revenue generation operation has hit the National Health Insurance Levy, as government has failed to pay up NHIS claims by most hospitals.
Already hospitals across the country have served warning to Ghanaians about their preparedness to go back to the cash and carry regime in order not to run bankrupt as the Mahama government has failed to make payments for close to one year.
It is recalled that in April 2013, Agence Française de Développement provided a concessional loan of 21.0 Million Euros to co-finance the DDF for a period of three years.
The District Development Facility is a performance-based grant aimed at improving the ability of Metropolitan, Municipal and District Assemblies to comply with the Government of Ghana (GoG) regulatory requirements. The DDF is jointly financed by the Government of Ghana, AFD and three other Development Partners namely CIDA, DANIDA and KFW.
The facility provides additional financial resources to the MMDAs based on the outcome of an annual performance assessment. MMDAs which meet the minimum conditions are given an Investment and Capacity Building Grant. All MMDAs are given funds to improve on their performance. The Facility is discretionary and funds are not earmarked or tied to specific sectors.
MMDAs use it to finance their Annual Action Plans which include the provision of basic school infrastructure and sanitation facilities, markets, CHIPS compounds, rehabilitation of roads and the provision of water through boreholes. The Facility also provides resources to train MMDA core staff on procurement, financial regulations and accounting, revenue mobilisation, documentation and records management among others.
The DDF has not only provided additional financial resources to the MMDAs but has resulted in the improvement of their capacity to perform their mandate. With just 38% of the MMDAs qualifying for the DDF funds in 2008, performance of the MMDAs has consistently improved to a current level of over 90% each year.
AFD provided assistance to the Government of Ghana to start the DDF and contributed 15.0 Million Euros over a three year period beginning 2009 to 2011 to finance the first phase of the DDF. This further contribution from AFD to finance DDF II is based on the successful implementation of the programme and what it has brought on performance of the MMDAs.
Support to local Governments is one of the three sectors of concentration of France in Ghana with Energy and Agriculture. Aside the support from the French Embassy to the decentralisation process, ongoing AFD financing in this sector amounts to more than €200.0 million (around 450 million of Ghana cedis). This includes financing of Ghana Urban Management Pilot Project (GUMPP), urban transport, environmental sanitation and rural water/sanitation projects.