Mahama Chops $177m Oil Money
President John Mahama
The Minority New Patriotic Party (NPP) in Parliament has accused the ruling National Democratic Congress (NDC) of dipping its hands into the country’s Petroleum Stabilisation Fund, creaming off $177 million.
Stabilisation fund generally refers to a mechanism set up by a government or the Central Bank to insulate the domestic economy from large influxes of revenue, as from commodities such as oil, for the maintenance of a steady level of government revenue in the face of major commodity price fluctuations (hence the term ‘stabilisation’), as well as the avoidance of inflation and associated atrophy of other domestic sectors.
It generally involves the purchase of foreign denominated debt, especially if the goal is to prevent overheating in the domestic economy.
At a press conference in Accra yesterday, members of the Minority, led by their Leader and MP for Suame, Osei-Kyei Mensah-Bonsu, claimed to have evidence that the NDC government had tampered with the Fund.
Ranking member on Finance and Member of Parliament (MP) for New Juaben South, Dr. Mark Asibey-Yeboah, who addressed the media said, ‘We are in possession of evidence that shows that the government with the complicity of the Bank of Ghana, has in fact illegally utilised the Petroleum Stabilisation Fund.’
He claimed, ‘The first withdrawal of $177 million was made in May 2014, in violation of the Petroleum Revenue Management Act (Act 815).’
Recently, NDC General Secretary Johnson Asiedu Nketia called for the usage of the Heritage Fund as well in view of the low inflow of revenues under the Mahama administration.
Dr. Asibey-Yeboah and his colleague MPs have therefore tasked Parliament to, as a matter of urgency, investigate the issue while asking the government and the Bank of Ghana to come clean on the matter.
The Minority equally expressed concern about the outcome of the recently held National Economic Forum which came out with a 22-point consensus touted the ‘Senchi Consensus’.
‘With the economy rapidly running out of international reserves, a rising inflation, government unable to meet statutory payments and thus piling up arrears, mounting arrears to contractors and also public sector wages and salaries, a rapidly depreciating currency which is happening on a daily basis, an ongoing power crisis, a continuing upward adjustment of petroleum prices attributable, primarily, to the daily fall of the Cedi, a general increase in the cost of living and the cost of doing business, how is the Senchi consensus going to deal with these problems?’ the Ranking member wondered.
The Falling Cedi
Instead, he noted, ‘It is clear that the Senchi Economic Forum did not restore confidence in the economy and economic management in general’ since according to him, ‘if there is an implementation plan it is not known to the public.’
Aside that, Dr. Asibey-Yeboah said, ‘The cedi has continued to depreciate and is currently above GH¢3.0 to the US dollar with no end in sight.’
He could not comprehend why the discussions at Senchi did not also reach any consensus on one of the most important issues bedevilling Ghana’s economy: the issue of corruption.
‘With corruption having been elevated to the level of a serious hallmark of this NDC government as regards Woyome, Isofoton, Waterville, Construction Pioneers and other judgment debts, GYEEDA, SADA, SUBAH, the Merchant Bank and Ridge Hospital scandals, STX, etc. how could the Senchi Consensus not have had a word about the canker of corruption?’ he asked rhetorically.
The NPP has therefore offered some policy proposals in dealing with the current crisis facing the economy which among others, is that government should as a matter of policy and urgency, significantly cut down on borrowing for now.
‘The announced intention to borrow an additional $1 billion from the capital market this year should be shelved because it would only be achieved at very high cost which would worsen the fiscal and current account situation and make Ghana’s debt unsustainable,’ he cautioned.
This, he said, was because ‘with low net international reserves, a double digit fiscal deficit, double digit current account deficit, and double digit inflation, Ghana may have to pay a very high interest rate, possibly, a double digit interest rate, for any sovereign bond issued this year.’
The Minority also stressed the need to restore confidence in the banking system and a degree of certainty in the foreign exchange regime, asking the Bank of Ghana to ‘reverse the new directives relating to the forced conversion into Cedis of repatriated export earnings and forced conversion into Cedis of withdrawals from Foreign Currency account (FCA) and Foreign Exchange Accounts (FEA).’
‘There is no problem with repatriation of export proceeds but there must not be forced conversion of those proceeds into Cedis,’ they insisted.
Apart from that, Dr. Asibey-Yeboah said ‘the new directives are based on the rather wrong view that dollarisation is responsible for depreciation of the Cedi,’ adding that ‘international experience shows that regulations such as those issued by the Bank of Ghana tend to be short-lived in effect as market participants find ways to circumvent them.’
By Charles Takyi-Boadu
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