Parliament must fortify guard over Contingency Fund – ACEP to govt

The African Centre for Energy Policy (ACEP) says Parliament ought to strengthen protection over the Contingency Fund in the wake of the decision by government draw funds from the Ghana Heritage Fund to fight Coronavirus.

The think-tank in a statement analysing the Finance Minister’s statement on the Economic Impact of the Covid-19 pandemic on the Economy of Ghana, said: “The COVID-19 pandemic has shown that Ghana needs a reasonable buffer for unanticipated expenditure to allow swift responses to such threats and it is for this reason Parliament ought to strengthen oversight over the Contingency Fund”

“The Finance Minister should recognise that the Ghana Stabilisation Fund (GSF) is not a substitute for Contingency spending. The Contingency Fund is more readily available to address urgent expenditures. This is not the same on the availability of the GSF which has to be withdrawn from investment instruments before it be utilized. Also, the volatility of oil revenues is an ever-present threat to oil producers. This requires significant buffer (a lot of sacrifice) in the GSF to smoothen the budget,” the statement added.

ACEP is also suggesting there be an urgent need for further rules on the GSF to enable the fund to deliver on its objective, adding, consistency is required on the withdrawals and capping of the Fund.

“The past practice shows that the discretionary power to cap the GSF is too loose and renders the Fund unable to mitigate revenue shortfalls. A clear and consistent formula is necessary,” the think tank said.

ACEP, however, maintains that the balance of the stabilisation fund at all times should be a minimum of 40 percent of the projected oil receipt for the fiscal year.

In a submission to the floor of Parliament, March 30, on the valuation COVID-19’s impact on Ghana’s economy, Finance Minister, Ken Ofori-Atta, indicated that the Petroleum Revenue Management Act 2011 (Act 815), be amended to allow for withdrawals from the Ghana Heritage Fund, to undertake alternative expenses during a national crisis.

According to him, the move among other fiscal measures will lessen the potential economic impact on the country.

But the policy think tank, ACEP and other civil society groups like the Public Interest and Accountability Committee (PIAC) have raised concerns about the withdrawal of funds from the Ghana Heritage Fund.