The African Centre for Energy Policy, ACEP, says efforts by government to draw funds from the Ghana Heritage Fund to stem the spread of the Coronavirus pandemic is not acceptable.
The Think Tank says the use of the Fund is ‘akin to telling citizens to go for their pension because they are faced with challenges in a COVID-19 world.’
In a statement analysing the Finance Minister’s statement on the Economic Impact of the COVID-19 pandemic on the Economy of Ghana, ACEP stated that, “The discipline to save for the future is a difficult one, but must be encouraged and sustained. Spending the heritage fund today is akin to telling citizens to go for their pension because they are faced with challenges in a COVID-19 world. The future of oil is more uncertain today than it has ever been. The fund is envisioned to provide support for the budget when Ghana is no longer receiving revenues from oil and that is an important foresight that should not be crucified today.”
It will be recalled that the Finance Minister, Ken Ofori-Atta, on Monday, 30th March 2020 submitted to Parliament a valuation of COVID-19’s impact on Ghana’s economy, and why among other fiscal measures to alleviate the impact, the Petroleum Revenue Management Act 2011 (Act 815), should be amended to allow for withdrawals from the Ghana Heritage Fund, to undertake emergency expenditures in times of national emergency.
But ACEP says ‘the Heritage Fund will not solve Ghana’s problems if spent today.’
While commending the government for the bold steps taken to revise expectations for the year, ACEP is asking Parliament to strengthen oversight over the Contingency Fund as ‘The COVID-19 pandemic has shown that Ghana needs a reasonable buffer for unanticipated expenditure to allow swift responses to such threats.’
They also called on the Finance Minister to recognise that the Stabilisation Fund is not a substitute for Contingency spending.
“The Contingency Fund is more readily available to address urgent expenditures. This is not the same on the availability of the Ghana Stabilization Fund (GSF) which has to be withdrawn from investment instruments before it be utilised. Also, the volatility of oil revenues is an ever-present threat to oil producers. This requires significant buffer (a lot of sacrifice) in the GSF to smoothen the budget,” the statement said.
In addition, ACEP stated that there is the urgent need for further rules on the GSF, a mechanism to help the country to smoothen the budget expenditures of the Annual Budget Funding Amount of petroleum receipts.
It explains that, to enable the fund to deliver on its object, consistency is required on the withdrawals and capping of the Fund.
“The past practice shows that the discretionary power to cap the GSF is too loose and renders the Fund unable to mitigate revenue shortfalls. A clear and consistent formula is necessary,” it noted.
ACEP is the latest CSO to kick against the use of the Heritage Fund after several groups including the Public Interest and Accountability Committee, PIAC, raised similar concerns.