The Public Interest and Accountability Committee (PIAC), has urged the Minister for Finance (MOF) to build a stronger buffer for the Ghana Stabilisation Fund (GSF).
This is to enbale the fund effectively serve its purpose of shoring up Annual Budget Fund Amount (ABFA) expenditure when there are revenue shortfalls in the budget.
The PIAC made this recommendation in its ‘2021 semi-annual report on the ‘Management and Use of Petroleum Revenues’ released in Accra on October 7, 2021.
The GSF has over the years served as a cushion for the ABFA as witnessed in 2015, 2016, 2020 and first half of 2021.
Last year, for instance, government had to fall on the fund as the impact of COVID-19 pandemic led to low oil prices, which caused unanticipated shortfalls in petroleum revenues.
The Ghana Petroleum Funds (GPFs) comprise the Ghana Heritage Fund (GHF) and the GSF. In terms of disbursement, the Petroleum Revenue Management Act (PRMA), stipulates that not less than 30 per cent of the benchmark revenue or actual petroleum revenue in any fiscal year should be paid into the GPFs.
In accordance with the law, a minimum of 30 per cent of the revenue accrued to the GPFs is transferred into the GHF and the balance transferred into the GSF.
The MOF has discretion, subject to parliamentary approval, to place a cap on how much can be accrued to the GSF as necessitated by macroeconomic conditions.
In so doing, the cap can be reviewed downwards when oil prices fall or upwards in periods of high oil prices.
Similarly, in the event of a national emergency, the GSF can be capped at a low amount and the excess transferred to the Contingency Fund, as established by the 1992 Constitution.
In the period under review, the cap placed on the GSF was maintained and the excess over the cap used to support the sustenance of the national economy, as a result of the impact of Covid-19.
According to the report, notwithstanding a slow recovery from the Covid-19 pandemic, Ghana, in the first half of 2021, witnessed some injection of investments by international oil companies (IOCs).
It cites that in April, Tullow Oil commenced implementation of its long-term business plan to unlock the full potential from the Jubilee and Tweneboa-Enyenra-Ntomme (TEN) fields through a multi-year, multi-well drilling programme.
In this campaign, Maersk Venturer drillship is expected to drill four wells in total in 2021, consisting two Jubilee production wells, one Jubilee water injector well and one TEN gas injector well.
Additionally, discussions with prospective investors are ongoing to promote Ghana as an attractive destination for investment, technology and a hub for refined petroleum products in the West African sub-region through the implementation of the Petroleum Hub project.