Business News of 2014-01-24

Finance Ministry to provide details of oil expenditure

The Public Interest and Accountability Committee (PIAC) has chided the Finance Ministry for failing to provide details on how over GH¢ 111 million allocated for 'Capacity Building' in the 2012 budget was utilised.

The Committee in a recent report on how petroleum revenues were managed in 2012, which was published in the Daily Graphic on Thursday January 23, 2014, is also not enthused by disparities in the Finance Ministry's report to Parliament and a subsequent full report on how oil revenues were utilised.

The Public Interest and Accountability Committee, established under the Petroleum Revenue Management Act to, among other things, provide an independent assessment of the management and use of petroleum revenues has therefore charged the Ministry to "take immediate steps to publish a more detailed report" on expenditure from petroleum revenues.

Parliament approved the total sum GH¢ 111,959,738 for a not-too-clear 'Capacity Building' initiative, but this has been described by some analysts as a misplaced priority and a waste of scarce revenue.

For instance, former Minister of Finance, Dr Akoto Osei, during a discussion on Newsfile on Joy FM and Multi TV in November last year, described both the 'Capacity Building' initiative and the huge sums allocated to it as misplaced.

He said it was ridiculous that although agriculture contributes more than 24% to the country's gross domestic product, only GH¢ 4 million was allocated to the sector in the 2012 Budget.

82% shortfall

PIAC also noted that the requirement for 70% of the Annual Budget Funding Accounts to be spent on the public investment under section 21 (4) of the Petroleum Revenue Management Act was not adhered to in the 2012 budget.

The report also revealed that actual transfers to the Ghana Petroleum Funds fell short by whopping 82% in 2012. The Committee found that the shortfall in revenues into the funds was due to different interpretation of section 23b of the Act in 2011 and 2012.

Section 23b of the Petroleum Revenue Management Act (Act 815) requires that excess revenues must only be transferred into the petroleum funds when revenues for the Annual Budget Funding Accounts (ABFA) have been exceeded.

But according to the PIAC report, the application of the law in 2012 was different from that in 2011 - resulting in the stark 82% difference. "In the view of the Committee the different interpretation of the law creates room for abuse which must not be encouraged", the report admonished.

The Ghana Stabilisation Fund and Ghana Heritage Fund are collectively known as the Ghana Petroleum Funds. The objective of the stabilisation fund is to cushion the impact or sustain the public expenditure capacity in periods of revenue shortfall

Source: myjoyonline.com
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