The Finance Minister, Ken Ofori-Atta, is calling for the amendment of the Petroleum Revenue Management Act (PRMA) to allow government to utilize portions of the Ghana Heritage Fund to deal with the Coronavirus pandemic.
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 been 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.
“Amend the PRMA to allow a withdrawal from the Ghana Heritage Fund to undertake emergency expenditures in periods of national emergency. There is an estimated US$591.1 million in the Ghana Heritage Fund,” the Finance Minister told Parliament on Monday.
The Minister is also seeking the support of Parliament to 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).”
“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,” the Finance Minister said.
Minority oppose use of Heritage Fund for COVID-19 fight
But the Minority side in Parliament has shot down the proposal. The Minority insists that it is not yet time for government to touch the Heritage Fund.
The Minority Leader, Haruna Iddrisu, argued that the government’s financial programmes must directly affect the ordinary Ghanaian.
“There is no difficulty in giving him (Finance Minister) approval to use the stabilization Fund, but what we are saying is that the Heritage Fund was set out for a purpose and we are not there yet. So make use of the stabilization reserve to support your activities and not the Heritage Fund,” Mr. Iddrisu insisted.
Coronavirus pandemic to cost Ghana GHS9.5bn – Finance Minister
Meanwhile, the pandemic is set to cost Ghana GHS9.505 billion, according to Ken Ofori-Atta, the Finance Minister. This will be 2.5 percent of Ghana’s revised GDP.
“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 when he appeared in Parliament today, Monday.
Ultimately, there will be a “fiscal gap of GHS11.4 billion,” the Minister added.
Import duties, for example, will fall short of target by GHS808 million for the 2020 fiscal year, the Minister indicated.
The effect of the virus on the economy will worsen because Ghana just began a two-week partial lockdown of Accra, Tema, Kumasi and Kasoa.