The Africa Centre for Energy Policy (ACEP) has expressed disappointment with Government for allocating about 40 percent of the Annual Budget Funding Amount (ABFA) in the 2014 Budget to financing oil and gas infrastructure.
Noting that such an act was inconsistent with the law, ACEP indicated that the ABFA, according to Act 815, can only be spent on development infrastructure, adding that of all the 12 areas to which the ABFA could be applied as provided for in Section 18(3), there is no oil and gas infrastructure.
“Oil and gas infrastructure can be financed from oil revenues ceded to the GNPC for its equity financing and other investments and this has already been provided for in the sum of US$192 million for the 2014 fiscal year. Therefore the allocation of about US$165 million of the ABFA for oil and gas infrastructure as against education (US$48 million) and agriculture (US$62 million) is a diversion of revenues meant for development intervention. This amounts to abuse of discretion, which must not be allowed,” it said in a recent statement.
It therefore called on Parliament to demand guidelines in accordance with Article 296 of the 1992 Constitution for the exercise of the discretion by the Minister of Finance in determining allocations of the ABFA to ensure that it addresses the development objectives as specified in Section 21(2).
“We have also observed the gradual shift of our economy towards the Dutch Disease. The performance of industry in 2013 at 9.1 percent by September 2011 is largely dominated by the oil and gas sub-sector, which is not healthy for our economy considering the poor linkages between the sector and the rest of the economy.
“This is also manifested in the decline of the manufacturing sub-sector from 17 percent in 2011 to five percent in 2012 and then to 2.5 percent in 2013. The disease is also confirmed by the real appreciation of the Ghanaian currency with a depreciation of four percent in 2013 against a depreciation of 17 percent by same time 2012.”
ACEP said whilst this can be attributed to the large inflows of foreign capital including oil revenues and proceeds from the EuroBond, the fundamental cause of the disturbing phenomenon is the slow response of the supply side of the economy due to low productivity; and the increasing demand for imports to neutralize the supply-demand gap even for basic manufacturing and consumer products.
“Government must therefore make efforts to improve on productivity in the manufacturing sub-sector and in particular pass the Industry Competitiveness law.”
