Ghana Petroleum funds yielding low returns

The continuos investment of Ghana’s Petroleum funds in low risk portfolios in the United States of America continues to record low returns for the country, a situation that has renewed calls by stakeholders for such funds to be invested in Ghana rather for higher returns.

Dr. Steve Manteaw, President of the Public Interest and Accountability Committee (PIAC) for instance, has supported calls for such funds to be invested in Ghana in a bid to replace the increasing borrowing of foreign loans, which come with high interest rates.

However, Allan Larsey, a Governance expert with GIZ believes that Ghanaian Politicians cannot be trusted with such funds based on their track records with regard to mismanagement of funds, especially in the mining and other sectors.

Therefore, handing over such funds to them to invest in the economy is very risky and should be left where they are.

According to the latest report on the petroleum funds, despite the low returns, the portfolios improved in the first half of 2017, relative to the second half of 2016.

The report states that total return on investment of the Ghana Heritage Fund (GHF) for the first half of 2017 was 2.09 percent, compared to -2.99 percent in the second half of 2016.

The Ghana Stability Fund (GSF) returned 0.54 percent in the first half of 2017, compared to 0.24 percent in the second half of 2016. On a year –to – date basis, the performance of the Ghana Petroleum Funds was mixed.

It noted that the Ghana Heritage Fund’s (GHF) year to date return was 2.09 percent in the first half of 2017, compared to 1.79 percent in the second half of 2016. However, GSF declined from 0.58 percent in the second half of 2016 to 0.54 percent in the first half of 2017. The Performance was described as mixed due to the flattening of the US Treasury yield curve in the first half of 2017.

At the end of the first half of 2017, total net realized income of the Ghana Petroleum Funds, since inception, was US$23.39 million compared to U$18.91 million in the second half of 2016.

Total return on investment of the GHF for the second half of 2017 was 2.96 percent, compared to 2.09 percent in the first half of 2017. The GSF total return for the second half of 2017 was 0.96 percent, compared to 0.54 percent in the first half of 2017

The total return on the GHF increased by 87 bps, compared to a 42-bps increase in the GSF total return.

In the second half of 2017, the GPFs returned a total net realized income of US$4.82 million, compared to US$4.48 million in the first half of 2017 and US$2.70 million in the first half of 2016, Of the second half return, GSF contributed 32.76 percent or US$1.58 million to total net income, compared to US$0.40 million in the second half of 2016, whilst the GHF contributed 67.24 percent or US$3.24 million, compared to US$2.30 million in the first half of 2016. In 2017, total net realized income for the GPFs was US$9.30 million, compared to US$5.77 million for 2016.