PIAC kicks against use of Heritage Fund to solve current economic problems
The Public Interest and Accountability Committee (PIAC) is kicking against any attempts by government to use the Heritage Fund to solve the current economic challenges facing the country.
National Democratic Congress (NDC) General Secretary, Johnson Asiedu-Nketiah, last week, sparked the debate when he proposed that government should consider using the heritage fund to deal with the country’s economic problems.
Some groups and individuals have supported Mr. Asiedu Nketia’s position, saying it does not make sense for the country to borrow at high interest rates, while the heritage Fund earns very little interest.
But in a statement signed and released Wednesday, PIAC, which is mandated to oversee the use of the fund, insists the money must be used for the specific purpose for which the fund was created.
Below is the full statement issued by PIAC:
STATEMENT BY THE PUBLIC INTEREST AND ACCOUNTABILITY COMMITTEE (PIAC) ON THE CURRENT DEBATE ON THE GHANA HERITAGE FUND
The Public Interest and Accountability Committee has noted with keen interest the suggestion by the General Secretary of the ruling NDC, Mr. Johnson Asiedu Nketia on the Ghana Heritage Fund (GHF) and the discussion it has generated on the airwaves.
While the PIAC appreciates the motivation for the suggestion, the Committee would like to proffer the following ideas to further clarify and enrich the ongoing public debate:
As the public may be aware the Ghana Heritage Fund was set up under Section 10 (2) (a) of the Petroleum Revenue Management Act, 2011 (Act 815)
“To provide an endowment to support development for future generations when petroleum reserves have been depleted.”
The withdrawal or otherwise from the fund is however governed by Sections 13 and 20 of the Act.
These provisions only allow withdrawal from the Ghana Heritage Fund when the petroleum reserves of the country have been depleted and the Ghana Petroleum Funds which are made up of the Ghana Heritage Fund and the Ghana Stabilization Fund have been consolidated into the Ghana Petroleum Wealth Fund.
This means that so far as the Petroleum Revenue Management Act is concerned, the Ghana Heritage Fund can only be accessed when the petroleum reserves of the country are completely depleted.
It may be clear therefore that the rationale for the Ghana Heritage Fund is to ensure that we do not consume all our eggs today; lest there is no chicken for us tomorrow.
It is important to note that in addition to the Ghana Heritage Fund, there exists also the Ghana Stabilisation Fund (GSF) which according to Section 9 (2) of Act 815 could be resorted to during periods of unanticipated petroleum revenue shortfalls or oil price slumps on the world market.
This funding option is available to the government to secure further budgetary support from the oil revenues accruing to the country in any particular year.
Under the present circumstance, the Ghana Stabilization Fund, if necessary may be accessed upon application to Parliament provided the relevant provisions in Section 12 of Act 815 are met.
It is worth noting that most of the petroleum resource-rich countries have funds similar to the Ghana Heritage Fund.
Ghana was recently rated among the best performing countries in oil funds transparency and oversight with the performance of the Ghana Heritage Fund as one of the considered factors.
An outstanding revelation during the public meetings of the PIAC around the country, the latest being the one held in Tamale on 29th April 2014, is that the Ghanaian public is very much satisfied with the establishment of the Ghana Heritage Fund and the philosophy behind it.
The Ghana Heritage Fund, as a matter of fact, in the wisdom of the drafters of the law regulating petroleum revenues, was not meant to be touched and used by the present generation of Ghanaians.
In the view of the PIAC, the investment of the Heritage Fund in low-yielding instruments is for a good reason.
The idea is to invest the fund in low-interest earning but safe investments for the long-term instead of high-yielding, gilt-edged securities which invariably are volatile.
The purpose therefore is to ensure that the money put aside for “generations yet unborn” maintains stability in value for the long-term.
Yaw Owusu Addo
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