Policy lead, petroleum and conventional energy at the Africa Center for Energy Policy (ACEP), Kodzo Yaotse, has expressed the need for government to manage the country’s petroleum revenues efficiently to avert losses.
According to him, government must follow the guidelines and compliance in withdrawing monies from the Stabilization Fund to support its budget. He revealed that going by the dictates of the law will further ensure proceeds are managed effectively.
“Normally, it’s just symptomatic of the finance ministry and finance minister and their total disregard for the rules that govern how petroleum revenues are managed in the country. We’ve not had these blatant breaches of the law like we are having now. It’s just a matter of the finance ministry deciding to respect the law that we have set to ensure that our petroleum resources are managed efficiently.”
Kodzo Yaotse
Commenting on Ghana’s decline in savings from crude exports by $1 billion last year, Mr Yaotse stated that such withdrawals which accounts for the decline is actually allowed by the law. He explained that the law that sets up the Stabilization Fund allows the finance minister to place a cap and take part of that to support the budget in “periods where petroleum revenue is low to be able to prop up the budget”.
“But the catch here is that it provides guidelines for such capping to be done and the regulations for the petroleum revenue management, if we were to follow it consistently as it provides for, we should be having today around $600 million in the Stabilization Fund, not the $143 million that we see. This is because the finance minister has consistently capped the Stabilization Fund at $100 million to be able to cream off the excess for supporting the budget and also for debt servicing.”
Kodzo Yaotse
Supporting budget of government with crude proceeds
Despite economic challenges experienced in the preceding year, Mr Yaotse highlighted that such problems can’t be an excuse by government for digging into the Fund to finance the budget. He underscored that per the criteria for taking such money, government “should take it when there are shortfalls in petroleum revenues that go into the budget”.
“So, if you have shortfalls and the ADFA cannot support the budget like it used to in the previous year, then it has to now take that money. That is why it was justified during 2020 when the government had to take GHC200 million to support the budget because of COVID. Now, last year, revenue increased by a billion, we are expecting the same trend this year, which means that there will be enough to support the budget. So, we shouldn’t have the situation where the finance minister will continually cap because the ADFA will be sufficient to support the budget.”
Kodzo Yaotse
Furthermore, Mr Yaotse argued that if those withdrawals had not been made, government would have accumulated about $3 billion into the Ghana Petroleum Fund compared to the $1billion it raked in.
“Because over the years, and every year, the finance minister will withdraw – last year, it was around $500 million that was withdrawn over the cap, and we are expecting more. So, this $83 million is just for the first half of the year, by the end of the year, we should expect that number of withdrawals to go up.”
Kodzo Yaotse
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