FINANCIAL ADMINISTRATION REGULATION, 2004 L.I 1802
PART IV, REGULATIONS 94 – 139(GROUP 17)
Part IV of the Financial Administration Regulation, 2004 L.I 1802 covers Advances, Loans and Equity Investment from the Consolidated Fund of which Regulations 94 to 139 deals with advances and loans only.
Moneys paid from the Consolidated Fund for public purpose that require the eventual repayment and also results in the acquisition of any equity interest in any institution are not classified as expenditure, but shall be advanced or lent from the Consolidated Fund and shall form a financial asset of the Consolidated(regulation 94)
According toregulation 96:
a)advances are moneys lent on condition of repayment within one year;
b)loansare moneys lent on condition of repayment within periods exceeding one year; and
c)equity investments which are moneys paid for stock or shares in any institution that confers ownership rights upon the Government of Ghana.
All the above shall be subject to limits approved by Parliament in the annual budget and applied according to the regulations. Contrary to this, is a breach of financial discipline.(regulation 95-97)
AUTHORITY
Subject to the directions of the Government, the Minister shall be the Chief Authority for the Issue and management of all advances, loans and equity investment of the Consolidated Fund. Before payment, there is the need for an agreement specifying conditions and terms of recovery concluded between the borrower and Government in accordance with Financial Administration Act 2003 (Act 654) which shall be signed by both parties in the presence of witnesses or a formal offer specifying conditions together with formal acceptance by the borrower. In the absence of the above the Minister shall determine the form.(regulations 98-99)
ADVANCES
These are moneys lent on condition of repayment within one year. Payment of advances shall require two authorities, namely
a)a general authority providing for a class of advances and
b)a specific authority for granting any particular advance within a class; and authority to approve a class of advances
Any scheme for establishing a class of advances shall be submitted to parliament for approval through the Minister, which shall contain
a)an explanation to show the purpose and estimated costs
b)proposed rules for operation of the scheme
c)any interest to be charged
d)maximum amount of advances allowed
e)designation of the officer(s) authorized to grant and manage advances.
When Parliament approves the rules of a class of advances, the Minister authorizes a head of department to administer advances of that class upon application by that head. The Minister shall also state the maximum amount that may be advanced under that class at any time, copies of which shall be lodged with the Controller and Accountant General and the Auditor General before the Controller and Accountant General can effect payment.
The Minster has the authority to grant any specific advance which he can delegate to a head of department or Chief Finance Officer not below the rank of Director and the power shall be exercised personally by the specified officer. A head of department may delegate responsibility for the administration of advances to the Chief Finance Officer who may also sub-delegate responsibility to an officer of the Accounting Class of a rank that may be specified in Departmental Accounting Instructions.
Advances shall not be granted to a public officer when the officer has not fully paid or do not regularly pay an advance in the same class and when an outstanding advance is standing an officer on account of losses, uncleared cheques or unretired imprest.
The head of department shall ensure that accounts are kept for advances issued and recoveries shall be made by
a)deduction from payment due from Government to the borrower
b)direct payment to the Government by the borrower or his proxy
c)recovery from the borrower’s estate or
d)any other means appropriate.
Another type of advance is, losses made by public officers for which an account shall be opened in the name of the officer by the head of department. Such losses do not have limits but whenever it exceeds the forecast given, a report explaining the circumstances must be made to the Minister.
Also, advances to contractors( i.e. a general class of advances) is provided for the purposes of facilitating the work of Ghanaian contractors by assisting in the finance of works carried out on behalf of Government and shall be made in accordance with the terms and conditions signed by both parties.
d)Recoveries of this advance and statutory deductions such as taxes shall be made from the contract payments and that a final payment shall not be made until the head of the department has confirmed by certifying the payment voucher that no balance of the advance is outstanding..(regulations 100-127)
LOANS
Loansare moneys lent on condition of repayment within periods exceeding one year. They are classified into general and specific.
General classes of loans issued in accordance with an approved loan scheme shall be administered and accounted for according to the procedure for loans as laid down by these regulations and the accounting manual.
Specific loans shall be sought trough the Minister and shall require the approval of Parliament which are done in two stages, namely
a)authority to negotiate a loan which may be given subject to any directions of the Government regarding terms and conditions to be included in the agreement
b)approval of the loan agreement shall be submitted together with recommendations relating to the terms and conditions to be negotiated..(regulations 130-)
Loans shall be drawn up in consultation with the Attorney General subject to ratification by parliament after signature by both parties and shall be approved and endorsed by the Minister: copies of which shall be lodged with the Controller and Accountant General and the Auditor General before the Controller and Accountant General can effect payment. (regulations 130-135)
The Administering Authority shall be given the power to monitorand report any failure on the part of the borrower to pay interest or the principal by due date to the minister, and that any interest unpaid shall be added to the principal sum loaned, and interest at the prescribed rate shall be charged on the total sum.Borrowing institution shall submit its annual audited accounts to Minister,the Controller and Accountant General and the Auditor General.(regulations 137-139)