Drop In World Market Prices Of Oil Should Not Affect Economy -Kwarteng

By Maame Agyeiwaa Agyei ([email protected])

2The New Patriotic Party Member of Parliament for Obuasi West, Mr. Kwaku Kwarteng, has debunked the assertion that the fall in world market prices of oil have adverse effect on the economy.

According to him, Ghana as a net importer of petroleum will not lose if the world market price falls and that the assertion that the drop in oil prices affects the economy is not true. He said: “The suggestion that when oil prices falls it hurts our economy, is a dishonest one. Ghana is a net importer of petroleum.”

He noted that “whenever petroleum prices fall, the analysis has been that, what we have been losing from the export side; nobody is telling us what we are gaining from the import side. “For a country that imports crude, I think we should drop this suggestion that a drop in crude oil prices on the international market hurts our economy.”

Mr. Kwarteng said this when giving his party’s stance on Fiscal Management at the Public launch of Policy Positions on Oil and Gas, organized by the Institute for Democracy and Electoral Assistance (IDEA) and Natural Resource Governance Institute (NRGI), in partnership with Penplusbytes, a local Non-Governmental Organization.

The forum brought together members of the four major political parties, National Democratic Congress (NDC), New Patriotic Party (NPP), Convention People’s Party (CPP) and the People’s National Congress (PNC), represented by Dr. William Ahadzie, Kwaku Kwarteng, Kwame Juantuah and Bernard Mornah respectively, with Professor Audrey Gagdekpo as the Moderator.

Positions on Transparency and Accountability on Oil and Gas contracts

The NPP’s Kwaku Kwarteng said when his party comes to power they would ensure that, contract disclosure must be legislated.

He was of the view that it is crucial for oil and gas contracts to be disclosed to the people, in order not to suffer corruption.

PNC and CPP’s Bernard Mornah and Kwame Juantuah were also of the view that, a proper data should be free and available on oil and gas contracts so as to ensure transparency in the management of the revenue.

The NDC’s Dr. Ahadzie, also said his party would take a closer look at every contract to make sure that there is transparency. He said the government was careful how revenue are being used when it comes to oil and gas.

Oil and Gas Revenue Management

Hon. Kwaku Kwarteng, MP for Obuasi WestOn the issue of Oil and Gas Revenue Management, all the four major political parties unanimously lauded the Heritage Fund, but kicked against misusing the funds, saying it should be left untouched for the future generation.

PNC representative said they would prefer saving for the future and that revenue from oil and gas should be invested in agriculture and agro processing.

Dr. Ahadzie on his part said: “The Heritage Fund means we want to leave a legacy for the future”.

According to him, his party was aware that oil is exhaustible resources so revenue realized from it must be saved and used for future development.

The NPP also affirmed that it will not abolish the Heritage Fund but would make public what is saved. He said: “We uphold it. However, it is important to see the returns we are getting on the savings for the future.”

According to NPP, policy makers should owe it a duty to future generations to ensure that what it is being saved for them, yields adequate returns.

“We need to take a close look at the current situation and know why returns on money in the Heritage Fund are so low; sometimes 2.5% -3% at a time we are borrowing on the international market at 10.75%”.
The legislator said his party sees the current situation as irregular and would take a look at the money in the Heritage Fund and how to maximize the return on it when they assume power.

The NPP representative (Kwarteng) reiterated his earlier exposition that being a net importer of oil, Ghana cannot claim to lose revenue as a result of falls in the price of crude on the world market.

He said going forward, analysis must be done on taxes “we put on petroleum to get more money to compensate loss on our exports, so that the impression is not created that somehow our economy is hurt.

“Broadly, we think that oil money is just money. If the broad financial management of the economy is infested with corruption and bad spending, you are never going to have a culture where people say: ‘Well, when it comes to other monies, we can mismanage it, but for oil money, we have to manage it well.

“So, we think the real answer is cutting the waste and the corruption and improving the general management of the economy, so that oil money can fall into that culture. That is the position an NPP government will pursue”.

Bernard Monnah on behalf of PNC also said: “fall in crude prices should not be the reason for the country to be at a standstill”.

He said the dipping oil prices on the world market, for a country that imports more of the product than it exports, would translate into a reduction in the amount of money the state spends to import petroleum, hence the state would not be left worse off.

3The CPP said there should be prudent economic policies and management. Adding, Ghana is currently running a deficit with its economic fundamentals.

According to the CPP, this situation has created an apparently necessary over-reliance on revenue from the extractive sector where the country currently expends 100% of gold revenue and 70% from oil and gas sectors.

The party advised that since both the resources and benefits from the extractive sector have diminishing returns, it is important to ensure equity and diligence in the management of revenue from the sector.

The Norwegian Ambassador to Ghana, Mrs. Hege Hertzberg said, they believe that petroleum and oil and gas of a country belongs to the people and that it is only prudent for them to decide what to do with it.

She commended the organizers of the program for holding such a forum to empower the electorate to know the stance of political parties on important matters, to help them make informed decision when voting.