Some Civil Society Organizations (CSOs); Friends of the Nation, Center for Public Interest Law, and Natural Resource Governance Institute have joined calls urging government not use the Heritage Fund as a source of finance in combating the novel coronavirus in Ghana.
The Finance Minister, Ken Ofori-Atta while addressing Parliament on the economic impact of COVID-19 on the country called for the amendment of the Petroleum Revenue Management Act (PRMA) to allow the government to utilize portions of the Heritage Fund to combat the Coronavirus outbreak.
He also sought the support of Parliament to amend the relevant laws to lower the cap of the Stabilisation Fund from US$300 million to US$100 million to enable the government scoop the excess funds to bridge the gap created by the economic impact of the pandemic.
These suggestions from the Minister has since sparked up many discussions, with some individuals and groups disagreeing to the move or not.
The three CSOs, in a statement, 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”.
Giving reasons for this assertion, they said 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 intergenerational 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.
The group further suggested 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.”
Minority opposes the use of Heritage Fund
The Minority side in Parliament had earlier shot down proposals for the government to use part of the Heritage Fund to finance the fight against the coronavirus disease in the country.
The Minority Leader, Haruna Iddrisu, insisting that it is not yet time for the government to touch the Fund argued that the government’s financial programmes must directly affect the ordinary Ghanaian.
A Member of the Finance Committee of Parliament, John Jinapor also pledged not to allow the government to touch money from the Fund.
“We have no problem with that but the Heritage Fund is supposed to accumulate for future generations. The Ghana Heritage Fund has a purpose, and that purpose will not be defeated. We would not be part of any attempt to run on the back or COVID-19 to deplete the account,” he stated.
KT Hammond backs government
But the Member of Parliament for Adansi-Asokwa in the Ashanti Region, KT Hammond says that he sees no reason why the Heritage Fund should not be invested now to secure the future of the country.
The Adansi-Asokwa legislator argued that the best time to invest the funds for the future generation to benefit from is now.
“What is the purpose of this Heritage Fund? When you travel abroad you are quite happy with their infrastructure and that is because they used the money that they had at the time for the purpose of the future generation. I mean the issue is that let’s leave this money for the purposes of the future generation. Let’s use the money to establish our systems and put together the economy to build Ghana for the future generation.”
Other options to be used and not GHF
Meanwhile, the Member of Parliament for North Tongu, Samuel Okudzeto Ablakwa has proposed some measures he believes will help the government gather enough funds for its Coronavirus Alleviation Programme rather than relying on the Heritage Fund.
Mr. Ablakwa believes President Nana Akufo-Addo can secure more funds for the fight against COVID-19 by among others, reducing by 60 percent the number of Ministers and presidential staffers.
About the Heritage Fund
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 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.
In view of this Parliament of Ghana pegged this figure at 9%. This means that out of the total oil revenue received into the Petroleum Holding Fund, the Heritage Fund receives only 9%.