The Public Interest and Accountability Committee (PIAC) has said there is a loophole in allowing the Minister for Finance to place a cap on the Ghana Stabilisation Fund (GSF) at his or her discretion as necessitated by macroeconomic conditions; albeit with the approval of Parliament.
It said that to place a cap on how much can be accrued to the fund, there was no established criteria for the determination of the cap and use of proceeds.
The Chairman of PIAC, Mr Noble Wadzah, during the launch of an ‘issue paper’ in Accra said the issue of best practice should be informed mainly by the peculiarities of any society.
“The law on which PIAC operates is grounded on transparency and accountability. So, providing unyielding opportunity for discretion is at variance to the tenets of transparency and accountability.”
“Clearly, it is an opportunity for corruption risk which we need to address as a country. What is important is to raise the issue and when do, we must have a consensus around it,” he stated.
He noted that the resource will not be with the country all the time, therefore, it should be used as a resource capital to achieve better economic outlook into the future.
Mr Wadzah expressed concern that 10 years into oil, the effectiveness of an Investment Advisory Committee (IAC) was difficult to measure.
He said the country was still stuck to the practice of investing in low qualifying instruments.
“A practice we believe can be better improved with a well-resourced, functional, and independent IAC.
“But if with this structure there's still unyielding opportunity for discretion, then it has to be addressed or else it's like using one hand to give and another to take,” he said.
Basis to cap
The Technical Manager of the PIAC, Mr Mark Agyemang, said since the GSF was established to smoothen and cushion government expenditure from revenue shortfalls, there was the need to have enough accumulation to the fund to achieve the purpose.
He said that currently, due to COVID-19, it has been capped at US$100 million against US$300 million in 2018/2019.
“Assuming the pandemic prolongs into 2021 and we have to reduce petroleum revenue, US$100 million can't even cater for a quarter expenditure with regards to programmes and projects under the Annual Budget Funding Amount (ABFA).”
“In essence, what we are saying is that we need to have a basis for capping the GSF, taking into account the purpose for establishment of that fund,” he emphasised.
Mr Agyemang said the fund formed part of the Ghana Petroleum Fund (the Heritage Fund and GSF) and that these are universal with returns earned on discount.
“The law clearly states that when we deplete all our petroleum resources these two funds and whatever is remaining in the Petroleum Holding Fund should be merged to form the Ghana Petroleum Wealth Fund (GPWF).”
“We should be mindful of this so that we don't cap it so low without a justified basis and deprive the GPWF the needed resources that it needs,” he added.
The issue paper
The PIAC launched an issue paper cataloguing a number of issues needing urgent attention in the petroleum revenue management space.
The launch, done ahead of marking a decade of petroleum production in December this year, is to draw the attention of appropriate authorities to deal with the issues.
Some of the issues raised included; the management and utilisation of the ABFA; revenue collection; management and utilisation of the Ghana Petroleum Funds and implementation challenges under the Petroleum Revenue Management Act (PRMA).