Civil Society Organizations (CSOs); Friends of the Nation, Center for Public Interest Law, and Natural Resource Governance Institute, are asking government not to use funds from the Heritage Fund to finance the fight against the COVID-19 pandemic in Ghana.
This comes after the Finance Minister, Ken Ofori-Atta, made a request to Parliament on 30th March, 2020, to amend the Petroleum Revenue Management Act, 2011 (PRMA) to allow the government to utilize portions of the Heritage Fund to combat the Coronavirus outbreak.
The Heritage Fund is a creation of section 10 of the Petroleum Revenue Management Act 815 enacted in 2011. The purpose of the establishment of this fund is to provide an endowment to support the development of future generations when the petroleum reserves have been depleted according to Act 815 (2011) and amended Act 893 (2015). The fund receives a percentage of oil revenue accrued to the Petroleum Holding Fund.
The Finance Minister made the request while addressing Parliament on the economic impact of COVID-19 on the country.
He also appealed for the backing of Parliament to amend the relevant laws to lower the cap of the Stabilization Fund from US$300 million to US$100 million to enable the government use the extra funds to bridge the gap created by the economic impact of the pandemic.
In a statement signed by the three CSOs, they expressed worry with these “radical proposals which, if carried through, would have serious implications on petroleum revenue management in particular and fiscal governance in general during and post the pandemic”.
They explained that the usage of the Heritage Fund should not be welcomed at all because “the PRMA makes provision for excess resources to be deposited into the contingency fund. However, adherence to this requirement has often been problematic as observed by many CSOs.”
“If this were adhered to, the proposal to use the Heritage Fund which is meant to be an inter-generational investment for when Ghana’s oil resources are depleted to mitigate economic impact of COVID-19 would not be necessary. It is important going forward to streamline this and ensure that this is enforced in the long-term. In the short term and within the remit of the exigency, we expect any crude price appreciation and subsequent revenues to be distributed in ways that would not constrain the contingency fund,” the statement added.
In addition, “the 5% threshold of fiscal deficit as a percentage of GDP as per the Fiscal Responsibility Act (Act 928) are also proposed to be amended. However, the Minister in his statement does not indicate by what margin. This discretion is not anything welcoming and needs to be plugged. We recommend that there is specification, and we propose not more than 1% upward adjustment of the threshold, as basis for any approvals by Parliament,” it noted.
The group further proposed that “As the government seeks rapid financial facilities from the World Bank (GHS 1,716 million) and the IMF (GHS3,145 million), we expect that the processes for contracting and utilization of these funds be transparent and must prioritize the poor, vulnerable businesses in the informal sector, primary health care providers and especially target women and Persons with Disability. We further support expanding the LEAP programme to cushion the impact on extremely poor people.”
Read the full statement here:
Don’t touch Heritage Fund; you’ll burden future generations – IES cautions gov’t
The Institute for Energy Security, IES, has also stated that attempts by government to fall on the Ghana Heritage Fund to fight the spread of the Coronavirus pandemic cannot be justified.
The Institute says the utilization of Fund deliberately set aside for future use, will leave future generations with a burden too huge to carry.
