Three Civil Society Organisations in the extractive sector have called on the government to seek alternative financial sources to deal with the COVID 19 pandemic instead of taking monies from the Heritage fund.
“We are deeply worried about some radical proposals which, if carried through, would have serious implications on petroleum revenue management in particular and fiscal governance in general during and post COVID 19 pandemic.”
A joint statement signed by Messr. Solomon Ampofo, Friends of the Nation, Augustine Niber, Centre for Public Interstate Law and Nasir Alfa Mohammed, Natural Resource Governance Institute and copied to the Ghana News Agency has said.
According to the statement, the Minister for Finance, Mr Ken Ofori-Atta, addressed Parliament on the economic and potential impact of COVID-19 on the economy of Ghana and underscored the disruption in economic activities and external shocks occasioned by the COVID-19 pandemic.
It said the Minister outlined measures that the government intended to pursue to mitigate the impacts of the pandemic on the economy and for a country with a projected fiscal gap of GH¢11.4 billion (2.9% of revised GDP) relative to a recalibration of the 2020 Fiscal Framework underpinning the approved 2020 Budget.
The statement indicated that the measures included the proposal to invoke section 23 of the Petroleum Revenue Management Act, 2011 (Act 815 as amended) (“PRMA”) to lower the cap on the Ghana Stabilisation Fund (GSF) from the current $300 million to $100 million ostensibly to allow for transfers of sufficient funds to the Contingency Fund to finance government’s Coronavirus Alleviation Programme (CAP)
Also to amend the PRMA to allow for withdrawal from the estimated $591.1 million in Ghana Heritage Fund (GHF) to undertake urgent expenditures concerning the Coronavirus pandemic.
The statement said in the case of the GSF, the proposal, though legal, was questionable and added that the proposed US100 million cap was very low and has the potential to trigger government’s appetite for borrowing against the Sinking Fund to the disadvantage of the constitutionally mandated Contingency Fund established for purposes of helping the government mitigate the impact of unanticipated fiscal imbalances.
The statement elaborated that if successive governments had adhered religiously to the requirements of the law, there should not be any difficulty mitigating the economic impact of the present crisis (assuming the March 30 crude price of $22.9 a barrel) without having to cap the GSF at $100 million below the current threshold of $300 million.
It noted that “in the absence of a clear plan to the people of Ghana on how this proposal would roll out and when the proposed cap would be restored to its original threshold, there is no guarantee that the excess amounts beyond the proposed lower capping threshold of $100 million would not be creamed off into the Sinking Fund for debt servicing purposes rather than into the Contingency Fund to finance government’s proposed Coronavirus Alleviation Programme (CAP)”.
The statement recommended that ” In the medium to long term, it is our call to government to take a serious and national look at our tax concessions starting with the exemptions bill to ensure that funds like these give us wider fiscal space to deal with unfortunate emergencies like COVID-19 and broadly, national development.”
In the case of the GHF, we think the proposal should not be welcomed at all since the PRMA made provision for excess resources to be deposited into the contingency fund.
The statement further indicated “We further call on Parliament to ensure that all legislative amendments requested by the Ministry of Finance have a transitional and temporal period and provision after which the original laws amended come back into force”.
“We recognize that these amendments are sought to address extraordinary situations in such an extraordinary time therefore when all this stabilizes and when oil price appreciates by at least 100 per cent further, the ‘‘normal’’ times should be governed by ‘‘normal’’ laws”, the statement concluded.