The Head of the Finance Department, School of Business of the University of Cape Coast, Dr John Gatsi, is calling for a more stringent provision in the Petroleum Revenue Management Act (PRMA), 2011 (Act 815) to guide the usage of the Stabilisation Fund.
Although the fund was established under Act 815 to provide budgetary support in times of shortfalls in expected petroleum revenues, there is also the leeway for it to be capped for the excess funds to cater for other expenditure.
The continuous capping of the fund, Dr Gatsi explained, was as a result of less restrictions on its usage, and therefore, called for more restrictions in line with what the new government promised in its manifesto.
Highlighting issues that needed to be reviewed in the current PRMA with journalists in Koforidua at the weekend, Dr Gatsi said, “When you take allocations for instance, we have made the law so flexible that anytime the Minister of Finance wishes, he makes a statement and that leads to a change in the way the allocation has to be done.”
“There is stringent procedure for how we deal with the Stabilisation Fund but you can see that consistently for three years, the fund has been dealt with severely to the extent that what is left in the Stabilisation Fund is nothing to write home about. Even though the things they have helped to create are equally important, in terms of financial management, it is not the best procedure,” he said.
Dr Gatsi explained that the Stabilisation Fund had been dealt with so easily because the law didn’t put any restrictions in dealing with the fund, adding that “it is only in the case of the Heritage Fund that some restriction was put in place.”
The astute economist also highlighted the fact that there was a gradual shift to the use of the Annual Budget Funding Amount (ABFA) to fund the entire budget, an evidence of the flexibility of the law.
“It is like the entire budget is beginning to depend on the ABFA, especially when it comes to infrastructure. In the 2017 budget, the Minister of Finance identified four areas. The same minister is indicating that they are going to use the same ABFA to finance the free SHS. This means that the law is so flexible that it easily manipulates or distorts the original thought of the ABFA,” he said.
More powers for PIAC
The Public Interest and Accountability Committee (PIAC) is the body with oversight responsibility over the management of the country’s petroleum revenues but recommendations by the committee with regards to the prudent use of revenues continue to be flouted.
The Vice Chairman of the Committee, Mr Kwame Jantuah explained that it was necessary for PIAC to be given more powers to be able to take on institutions that breached the provisions in the law.
“Take a look at some of the things that happened in the last administration, especially with the Stabilisation Fund. If PIAC, being a body that represents the people in terms of letting them know how oil revenues are being spent, had more powers to take on institutions that breach the law, it will be helpful.”
“As to whether they should have powers of prosecution is another thing. But PIAC should be able to have those powers that can lead the prosecution,” he said after one of the workshop sessions.
He said PIAC should be given more responsibilities in terms of taking government institutions on in case they breached the PRMA.
“The PIAC is a dynamic institution and as we move forward, some of the things we put in the law to govern PIAC also have to change. The PIAC should have the requisite mandate to handle some of the new things that are coming on,” he said.
Mr Jantuah explained that although the government had its own reasons for the review of the PRMA, one provision that had to be critically considered was the minister having overall authority in certain issues.
He also said there was the need to look at the membership of the committee.
“Some members have a three-year term, others have a two-year term. Once they leave, all the institutional knowledge that they have goes away. I think that should be looked at,” he said.
The ruling government in its manifesto, ahead of the general election, promised to review and further amend the Petroleum Revenue Management Act 2011 (Act 815) to support investment of revenue from oil in high-impact strategic social and economic infrastructure.
The workshop, organised by the Institute of Financial and Economic Journalists (IFEJ), in collaboration with PIAC and with support from GIZ, was to discuss the 2016 half year report on the management of petroleum revenues by the PIAC.
It brought together journalists from various regions to discuss a wide range of issues with respect to the report.