THE PUBLIC Interest and Accountability Committee (PIAC) has criticised Parliament for failing to prevail on the Finance Minister, Ken Ofori-Atta, to reverse capping on the Ghana Stabilisation Fund (GSF) to its pre-COVID-19 status.
Mr. Ofori-Atta lowered the cap of the amount that can be accumulated to the GSF from US$300 million to US$100 million, with approval of Parliament in 2020, for the COVID-19 Alleviation Programme.
The downward review has since stayed there to date, with the minister also downplaying calls to restore to the US$300 million threshold, pointing to deficit problems.
“We know that the troubles are compounding and in the same vein, you would ask how I am going to help with lives and livelihoods, and we are running a deficit,” he said at a press briefing organised by the Information Ministry in May.
But PIAC says the retention of the current cap of US$100 million on the GSF for the year 2022 is not in accordance with the formula stipulated in L.I. 2381.
Chairman of the Public Affairs and Communications Sub-committee of PIAC, Eric Keyman Defor, told journalists at a sensitisation workshop in Koforidua at the weekend that “Parliament has gone to sleep” on the issue after giving approval to the minister.
According to him, a proper application of the formula, in line with Petroleum Revenue Management Regulations, 2019 (L.I. 2381), would have returned a cap of US$460.63 million.
He said Sub-Regulation 1 provides that in recommending the maximum amount of accumulated resources of the GSF, the minister shall ensure the amount is not less than the average of Annual Budget Funding Amount (ABFA) over a three-year period.
“Sub-Regulation 2 provides the three-year period in Sub-Regulation 1 shall comprise; (a) the current financial year; (b) the year preceding immediately before the current financial year; and (c) the year immediately after the current financial year.
“Current Financial Year (2022) is US$475.41 million. The year preceding immediately before the current financial year (2021) is US$352.79 million, and the year immediately after the current financial year (2023) is US$553.70 million,” he explained.
Mr. Defor stated that the three figures, when added together, would give a sum of US$1,381.90 million, and the average (total/3) is the US$460.63 million as the returned cap amount.
Capping Of GSF
The Petroleum Revenue Management Act (PRMA) authorises the Minister for Finance to cap the GSF and the excess over the cap transferred into the Contingency and Sinking Funds.
Regulation 8 of the Petroleum Revenue Management Regulations, 2019 (L.I. 2381) provides the formula for the calculation of the cap.
And, therefore, the cap on the GSF by L.I. 2381 should be US$460.63 million for the year 2022 and not US$100 million determined by the Minister for Finance, the PIAC official argued further.
Returns On Investment
On the returns on the Ghana Petroleum Fund (GPF), Mr. Defor said PIAC noted that besides diversifying the qualifying instruments of the GPFs, the investment portfolio should not be limited to the US Market.
“Other markets should be considered, albeit under the advice of the Investment Advisory Committee (IAC),” he quoted the recommendation by PIAC.
BY Ernest Kofi Adu