Finance Minister Seth Terkper has defended government’s decision to cap funds that flow into the stabilization fund on a low level.
The Stabilization Fund was establish after Ghana discovered oil to set aside some of the proceeds into the fund to sustain critical public expenditure when oil prices decline.
The African Center For Energy Policy, as well as the Institute for Fiscal Studies have constantly criticized government for capping the fund from US$250 million to US$100 million.
But speaking to journalists, Mr. Terkper insisted that the first use of the Stabilization Fund is to support the budget when crude oil prices go down.
“The first use of the stabilization fund was actually to support the budget, when the crude oil prices fell, debt was becoming an issue so I put a cap so I think that my good friend Dr. Amin, may be today may want to ask the questions, in fairness he is not the only one who has been questioning, some professors and others also have asked so we don’t want single him out. These debates will come as we implement these policies. But for those who were holding that view, my defense is am I justified today, issuing at 19 to use it to refinance a bond that I would have issued for 24 or 25 and doing that substitution and leading to less cost for government and therefore contributing to the very budget deficit we are talking about. I think there is a certain rationale, why the due policies were put in place,” he said.
By this, Mr. Terkper argued that Ghana’s deficit would have widened if measures were not taken to cap the stabilization fund at 19 percent.
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By: Lawrence Segbefia/citibusinessnews.com/Ghana