COVID-19: Focus on Contingency Fund, not Heritage – Govt told

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The Civil Society Platform on Oil and Gas has told the Government of Ghana to focus on the Contingency Fund to raise revenue in dealing with the effects of the coronavirus outbreak on the local economy.

The chief purpose of the Contingency Fund, which has been placed under the office of the President is to finance expenses related to urgent or unforeseen occurrences which have no provisions in the Appropriation Act of a given year.

The Platform has kicked against moves by the Finance Ministry to amend the Petroleum Revenue Management Act (PRMA) which when done, will enable the central authority touch the Heritage Fund for purposes of dealing with the effects of the COVD-19.

As part of efforts to control the outbreak of the coronavirus in Ghana, the Government is considering amending the PRMA to allow the central authority to withdraw funds from the GHF to undertake emergency expenditures in periods of national emergency.

The Finance Minister, Ken Ofori Atta made the announcement in Parliament on Monday March, 30, 2020.

He revealed that there is an estimated US$591.1 million in the Ghana Heritage Fund.

He told Parliament that : “I will now update the House on measures Government is proposing to close the fiscal gap. Since we are faced with extraordinary circumstances which require extraordinary measures, we would like to propose the following measures for the consideration and support of the House:

“Lower the cap on the Ghana Stabilisation Fund (GSF) from the current US$300 million to US$100 million in accordance with Section 23 (3) of the Petroleum Revenue Management Act (PRMA).  This measure will enable the excess amount in the GSF account over the US$100 million cap to be transferred into the Contingency Fund, consistent with Section 23 (4) of the PRMA.

“The amount transferred into the Contingency Fund will be used to fund the Coronavirus Alleviation Programme (CAP). Through this process, an estimated GHȼ1,250 million will be transferred into the Contingency Fund to Fund the CAP.  Mr. Speaker, we therefore wish to seek approval from this August House for the Finance Minister to use the Funds which will be available in the Contingency Fund to fund the Coronavirus Alleviation Programme.

“Arrange with BOG to defer interest payments on non-marketable instruments estimated at GHȼ1,222.8 million to 2022 and beyond;

“Adjust expenditures on Goods & Services and Capex downwards by GHȼ1,248 million; Secure the World Bank DPO of GHȼ1,716 million; Secure the IMF Rapid Credit Facility of GHȼ3,145 million; Reduce the proportion of Net Carried and Participating Interest due GNPC from 30% to 15%;

“Amend the PRMA to allow a withdrawal from the Ghana Heritage Fund to undertake emergency expenditures in periods of national emergency. There is an estimated US$591.1 million in the Ghana Heritage Fund.”

But a statement co-signed by Dr Steve Manteaw, Mr Kwame Jantuah, Mr Samuel Bekoe and Mr Emmanuel Kuyole, the Platform said : “We also welcome the pledge by the executive (Ministers, Deputies, and other political appointees) to contribute their three months’ salary to the fight against the epidemic. The Heritage Fund can certainly not be our first line of defence in an emergency. It must be for good reasons that the Constitution established a Contingency Fund, it’s time to take it seriously”.

It added : “We are of the conviction that though COVID-19 constitutes a clear and imminent threat to our existence, it is likely to serve as yet another opportunity to abuse the only evidence we have to show that this country has ever produced oil, given the wastefulness we have witnessed in the use of petroleum revenues.”

But CSPOG said while it “generally supports most of the Minister’s proposals, especially those relating to cost-cutting measures and expenditure realignment, including reduction in GNPC’s share of revenues, the group is convinced that the difficulty in which we find ourselves today wouldn’t shave been this dire if the government had kept religiously to the spirit and letter of the rules governing the petroleum revenue allocations.

“Indeed, we recognise that we are not in normal times but it is also important that current and future governments learn from some of the grievous mistakes we’ve made in order to avoid a repetition in future. ‘An unexamined life’, it is often said, ‘is not worth living’.”

Regarding its observations and concerns With regard to the Heritage Fund CSPOG said: “The Heritage Fund was established in recognition of the intergenerational interest in the hydrocarbon resource; hence it serves as a store of wealth for future generations.

“The Fund receives only 9 per cent of petroleum revenues.

“In 10 years, this has given us US$591.1 million.

“International best practices treat intergenerational funds as funds meant for the generation after petroleum reserves are completely depleted.

“Section 10 of Act 815 provides that we can go into the Fund after 15 years following its establishment, and even in that circumstance, Parliament will require a two-thirds majority, to access only the accrued interest and not the main transfers into the Fund”.

Source: Laudbusiness.com/Ghana

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