PIAC Kicks Against Government Decision to Dip Into Heritage Fund.
The Public Interest and Accountability Committee (PIAC) has kicked against the government’s intention to amend the Petroleum Revenue Management Act (PRMA) to access the Ghana Heritage Fund (GHF) as part of proposed fiscal measures to mitigate the impact of the COVID-19 pandemic.
The Committee said its position to refute government decision is informed by its mandate under Act 815, to provide independent assessment on the management and use of Ghana’s petroleum revenues; by faithfully adhering to the principles and philosophy that informed the passage of the PRMA in the first place.
It can be recalled that the Finance Minister, Ken Ofori-Atta while addressing Parliament on the economic impact of COVID-19 on the country called for the Petroleum Revenue Management Act (PRMA) to be amended to allow the government access some portions of the Heritage Fund to combat the Coronavirus outbreak.
Also, the Minister announced the government’s intention to lower the cap on the Ghana Stabilisation Fund (GSF) from US$300 million to US$100 million in order to use the excess funds for emergency purposes.
In a statement signed by the Chairman of the Committee, Noble Wadzah, it urged the government not to carry on with its decision.
“PIAC supports the use of part of the Stabilization Fund for COVID-19 but is against the utilization of the Heritage Fund for COVID-19. PIAC strongly urges the Government not to disturb the arrangements that underpin the PRMA. PIAC supports the use of part of the Stabilization Fund for COVID-19 but is against the utilization of the Heritage Fund for COVID-19,” the statement said.
However, the committee commended the government’s efforts to contain the virus.
“The Committee acknowledges the threat the COVID-19 pandemic poses to the Ghanaian society and the world at large, in which regard the Committee commends the efforts of government and citizens focused on containing the pandemic. Government’s search for resources to address the economic impact of the COVID-19 pandemic is in the right direction."
The Heritage Fund is a creation of section 10 of the Petroleum Revenue Management Act 815 enacted in 2011.
The purpose of the establishment of this Fund is to provide an endowment to support the development of future generations when the petroleum reserves have depleted, according to Act 815 (2011) and amended Act 893 (2015).
The Fund receives 9% percent of oil revenue accrued to the Petroleum Holding Fund.
PIAC’s Recommendation to the government on some fiscal measures to contain the virus
The Committee upon deliberations and its interest in aiding the fight against the coronavirus made the following recommendations to the government.
- · For the short term, government must review and reduce planned 2020 ABFA expenditure, and apply the savings to the COVID-19 Alleviation Programme (CAP). Reduce the capital expenditure focusing on roads and infrastructure.
- · Considering that in the best of times since 2011, petroleum revenue constitutes just 10 percent of total government revenues, PIAC recommends that other domestic revenue sources such as cocoa and minerals should be explored, given that these sectors are still in active operation.
- · Going forward, there must be a balance in allocating funds to the budget, the Sinking and Contingency Funds, as skewed withdrawals towards debt servicing have not prepared the country for national emergencies.
- · Even though the Health Sector is a priority area for ABFA expenditure, the pandemic has reinforced the critical nature of the Sector, with its interconnections to economic development, national security, food security, and the survival of the citizenry. Government must, therefore, review allocations to the sector vis-à-vis allocations to other priority areas (Roads & Rail, Education, and Agriculture).
- · PIAC supports the use of part of the Stabilisation Fund for COVID-19 but is against the utilization of the Heritage Fund for COVID-19.