Parliament’s Finance Committee on Wednesday April 1, 2020, concluded a meeting on government’s request for the lowering of the cap on the Stabilization fund from 300 million dollars to 100 million dollars..
According to Citi Business News sources in the meeting, the Committee could not conclusively deal with the matter due to the absence of critical documents that explain in detail what the excess funds to accrue from the lowering of the cap will be used for.
The Finance Minister on Monday told the house that money from the Stabilization Fund will be used to set up the Coronavirus alleviation programme to mitigate the economic impact of the pandemic.
The Minister will be required to provide all the details the committee is asking for before a determination is made on his request.
A member of the committee, Daniel Okyem Aboakye explained that, “There was a request for us to consider about two hundred-million-dollar draw-down from the Stabilization Fund, and the Committee is basically asking if they have a little bit of details before we bring our report to the chamber. We are not in ordinary times. We understand the need to do what we have to do; but that does not mean the Finance Committee will just say yes to everything that has to go to the extent that we can ask to know what these funds are going to be used for.”
“I think that it’s the right thing to do even though we are in the majority and we are ready to support the government, we just want additional details so that we can attach it to the report for consideration on the floor when we bring it down.”
Impact of novel Coronavirus
In his quest to assess the economic impact the novel coronavirus will have on the country, as directed by President Nana Akufo -Addo, Finance Minister, Ken Ofori-Atta, earlier this week, suggested that Parliament should amend the relevant laws to lower the cap of the Stabilization Fund from $300 million to $100 million to enable the government scoop the excess funds to bridge the gap created by the economic impact of the pandemic.
“Mr. Speaker… Since we are faced with extraordinary circumstances which require extraordinary measures, we would like to propose the following measures for the consideration and support of the House – Lower the cap on the Ghana Stabilisation Fund (GSF) from the current US$300 million to US$100 million in accordance with Section 23 (3) of the Petroleum Revenue Management Act (PRMA),” he said.
“This measure will enable the excess amount in the GSF account over the US$100 million cap to be transferred into the Contingency Fund, consistent with Section 23 (4) of the PRMA. The amount transferred into the Contingency Fund will be used to fund the Coronavirus Alleviation Programme (CAP). Through this process, an estimated GHȼ1,250 million will be transferred into the Contingency Fund to Fund the CAP. Mr. Speaker, we, therefore, wish to seek approval from this August House for the Finance Minister to use the Funds which will be available in the Contingency Fund to fund the Coronavirus Alleviation Programm,” he added.
He further noted that the country is set to lose GHS9.505 billion looking at the effect the pandemic is having on the country. This, he said will be 2.5 percent of Ghana’s revised GDP.
“Mr. Speaker, the total estimated fiscal impact from the shortfall in petroleum receipts, shortfall import duties, the shortfall in other tax revenues, the cost of the preparedness plan, and the cost of Coronavirus Alleviation Programme is GHS9,505 million,” he said in Parliament.