African Centre for Energy Policy kicks against government’s intention to draw from the Ghana Heritage Fund to solve the COVID-19 pandemic

The think tank in a statement said the use of the Fund is similar to telling citizens who contribute to pension schemes to go for their money because they are facing challenges in a COVID-19 world.

The statement which analysed the Finance Minister’s comments on the economic impact of the COVID-19 pandemic on Ghana, ACEP said that “the discipline to save for the future is a difficult one, but must be encouraged and sustained. Spending the heritage fund today is akin to telling citizens to go for their pension because they are faced with challenges in a COVID-19 world. The future of oil is more uncertain today than it has ever been. The fund is envisioned to provide support for the budget when Ghana is no longer receiving revenues from oil and that is an important foresight that should not be crucified today.”

On Monday (March 30, 2020), Finance Minister, Ken Ofori-Atta, submitted a valuation of the impact of COVID-19 on Ghana’s economy, and the fiscal measures put in place to mitigate the impact.

He gave reasons why the Petroleum Revenue Management Act 2011 (Act 815), should be amended to allow for withdrawals from the Ghana Heritage Fund, for emergency expenditures in times of national emergency.

However, ACEP said ‘the Heritage Fund will not solve Ghana’s problems if spent today.’

ACEP called on Parliament to strengthen its oversight over the Contingency Fund as “the COVID-19 pandemic has shown that Ghana needs a reasonable buffer for unanticipated expenditure to allow swift responses to such threats.”

“The Contingency Fund is more readily available to address urgent expenditures. This is not the same on the availability of the Ghana Stabilization Fund (GSF) which has to be withdrawn from investment instruments before it is utilised. 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 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 statement added.

Several CSOs have kicked against the use of the Heritage Fund with ACEP being the latest organization.