Business Analyst - June 2

Thursday, June 2, 2022
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BoG, others demonstrate satisfactory
progress in implementing
provisions of PRMA — PIAC
The Bank of Ghana, Auditor-General,
Public Interest, and Accountability
Committee, and Petroleum Commission
have demonstrated satisfactory progress
in implementing the relevant provisions
of the Petroleum Revenue Management
Act (PRMA), the Public Interest
and Accountability Committee has disclosed.
On the other hand, the Ministry of
Finance, Parliament, the Ghana Revenue
Authority, and the Ghana national
Petroleum Corporation have demonstrated
meaningful progress in implementing
the relevant provisions of the
PRMA.
But the Investment Advisory Committee
has demonstrated inadequate
progress.
On the institutional assessment of
petroleum revenue management conducted
by PIAC, Lead Researcher, Dr.
emmanuel Y. Tenkorang said the PRMA
falls short of prescribing the exact
specifics or definition of the 12 areas,
leaving room for conflation and potential
abuse by the political leadership of
the day.
In addition, there are other lingering
questions about the impact of Annual
Budget Funding Amount (ABFA)
funded projects and the attainment of
outcomes tied to broader national development
objectives.
he called for the requisite human
resources and tools for the GRA and
other institutions such as the Petroleum
Commission, PIAC, and the Ministry
of Finance to undertake their
critical mandate of petroleum revenue
management more effectively and efficiently.
“The requirement under 21(2) of the
PRMA (as amended) for the ABFA to be
used to maximise the rate of economic
development, promote equality of economic
opportunity to ensure the wellbeing
of citizens, and undertake even,
and balanced development of the regions
is yet to be fully attained”.
“It is a matter of common knowledge
that after ten years since the first
oil, there is the need to undertake a special
audit of ABFA funds over the past
ten years. The audit could also focus on
sectoral allocations in line with the requirements
of the PRMA and the PFM
Act. The Special audit must be a joint institutional
effort led by the Auditor General
and supported by PIAC.”, he added.
Management of GPFs
Dr. Tenkorang added that the lack of
a clearly defined investment policy has
constrained the ability of Fund Managers
to earn higher returns on the
GPFs.
These constraints were also compounded
by the non-constitution of the
Investment Advisory Committee (IAC)
between 2017 and 2019, leading to organizations
such as PIAC citing
breaches of the PRMA.
“We find that 74% of the withdrawals
from the GSF have been used
for debt repayment, while 21% has been
allocated to the Contingency Fund to
deal with national emergencies such as
the COVID-19 pandemic. Interestingly,
only 4% has been utilised to shore up
ABFA shortfalls.”
Dr. Tenkorang further mentioned
that these debt repayments are symptomatic
of developments within the
Ghanaian economy over the past
decade, adding, that due to low domestic
revenue mobilisation, increased interest
payments have occasioned
excessive borrowing (both domestically
and externally) to meet budgetary
shortfalls.
“Ghana’s debt servicing needs have
become expensive due to the high
coupon rates and volatility of the cedi,
the local currency. Given the historically
low returns, there is a need to rethink
the GPFs' investment strategy to
generate comparable returns to a
benchmark portfolio”, PIAC said.