The need for a long-term national development plan (LTNDP) to guide the spending of revenue from the country’s oil sources is now or never, the Public Interest Accountability Committee (PIAC) has said.
According to the committee, the default position of the Petroleum Revenue Management Act 2015, Act 815, (PRMA) is that, the Annual Budget Fund Amount (ABFA) should be spent guided by a LTNDP which will also address challenges associated with ABFA spending including the thin spread of projects and the uneasy and non-balanced allocation of ABFA to the priority areas.
In an interview, the Technical Manager of PIAC, Mr Mark Agyeman, said a LTNDP agenda was a major issue the committee would advocate as it marked 10 years of oil production.
He alleged that although the law listed 12 priority areas out of which the Minister of Finance should select four, the selections are often done to respond to party manifestos.
To back his claim, he said for instance that between 2017 and 2020, more than GH¢1.2 billion was spent on Free Senior High School (FSHS) alone.
“A party comes and selects projects according to its manifesto. So, those are manifesto-oriented and that’s why time and again, we are not willing and do not have the political will to do a LTNDP.”
“Petroleum revenue has become the cheapest source of revenue for governments. If we had a LTNDP, I don’t think we would thin-spread projects. There will be continuity of projects – monumental legacy projects that will transcend generations, and the current practice of using petroleum revenue to do painting and tiling which peels off after a month or so is not how we spend revenue from a finite resource,” he said.
Another issue Mr Agyeman cited was the administration of the Ghana Petroleum Fund (GPF), which is made up of the Ghana Heritage Fund (GHF) and the Ghana Stabilisation Fund (GSF).
He noted that the instruments in which the GHF was invested were low risk resulting in low returns, therefore, there was the need to diversify the investment portfolios so that the returns at the end of the day would be quite appreciable.
On the other hand, he explained that although the essence of the GSF is to provide economic buffer in times of unanticipated shocks to the national economy, about 90 per cent of withdrawals from the fund over the 10-year period of oil production has gone into debt repayment.
“The law allows for that. But the spirit and the letter of the law is that every year some money is put into the Contingency Fund, and don’t use everything to repay debt. About four per cent has gone to serve its core purpose of stabilising the national budget and six per cent put into the Contingency Fund so far,” he said.
Consequently, an analysis therefore shows that the country’s debt to Gross Domestic Product (GDP) ratio has also been going up.
“So, what it means is that the government knows that there is a Sinking Fund that it can use as collateral to borrow but that is not the essence of the Stabilisation Fund.”
According to him, it was not surprising that in 2020 when revenue reduced and government needed more money for projects, it fell on the unutilised or unspent GH¢1.48 billion ABFA accumulated over 2017-2019, out of which it actually spent GH¢826 million on the supplement projects in 2020,” he stated.
He recalled that the above monies were budgeted for projects years back.
“Now, you have abandoned those projects and have gone to spend the monies on new projects whereas that’s not the essence of the ABFA,” he added.