Govt touts mangt of oil revenues
The government has described the management of petroleum resources in the country as one of the best models in the West African sub-region considering the tight and rich provisions in the Petroleum Revenue Management Act (PRMA), Act 815.
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The Act, according to a Deputy Minister of Finance, Mr Cassiel Ato Forson, makes provision for savings for future generations, debt repayment, stabilisation and infrastructural development.
Opening of a two-day policy dialogue on revenue management in the extractives sector organised by CABRI and the Ministry of Finance, he said, the PRMA was the best thing that had ever happened to the country after it attained an oil producing status.
“We looked at other oil producing countries and how they have managed their revenues over time. We also looked at where they failed and we modelled our law around the successes and that is why we have one of the best models that you can see in petroleum revenue management,” he said.
The PRMA Act 815, he said, gave power to the Ministry of Finance to save and also ensure that enough revenue was accrued for the purpose of stabilisation, and the Ghana Petroleum Funds (GPF) of which part went into the Ghana Heritage Fund (GHF) as savings for the future.
“We have also established a stabilisation fund to take care of the economy when it is in need. There is also one to take care of the needed infrastructure and another to stabilise the economy anytime there is the need for it to deal with certain shocks as they come and go,” he said.
Government, he also said, had established the Sinking Fund purposely for the repayment of future debt.
Earmarking revenues
Mr Forson also explained that oil resources were not absolute and there was, therefore, the need to make adequate savings, and to check the quality of expenditure that benefited from oil revenues.
“We do not have to conclude that some expenditure are going to be absolute. The quality of the expenditure should be watched. People need to see what their resources are being used for. Earmarking in itself is not good but in the case of petroleum resources, I think earmarking to go,” he said.
In Ghana, the Annual Budget Funding Amount (ABFA) spells out exactly how petroleum resources are to be disbursed and on which areas it should be used.
“For instance, in our case, we have the Ghana Infrastructure Investment Fund (GIIF), which is a sovereign wealth fund to deal with our infrastructure needs. 25 per cent of the ABFA goes into the GIIF, purposely for infrastructure and this is run by the private sector,” he added.
Managing revenues
Petroleum resources are largely volatile, and as a result, it is hard to predict how it will impact revenues over time. There is, therefore, the need to adequately plan for the sector, especially in the context of volatility and how revenues are managed to promote sustainability, equity, poverty reduction and economic growth.
“Due to the volatile nature of petroleum resources, it is not really exactly what was anticipated. We need to take a second look at revenue mobilisation,” he said.
The forum brought together senior government officials from 15 African countries to discuss issues relating to the prudent management of petroleum resources.