Government to re-direct GETFUND, GNPC cash to fund free SHS – Baako

General News of Sunday, 19 February 2017

Source: Myjoyonline.com

2017-02-19

Kweku Baako Jnr2Abdul Malik Kweku Baako Jnr., Editor-in-Chief of the New Crusading Guide

Veteran journalist Kwaku Baako says the NPP government has a clear vision on how it intends to fund its free SHS campaign promised expected to cost GHC 3.6 billion annually.

He said even before the NPP won political power in December 2016, the party’s 2016 flagbearer Nana Akufo-Addo had revealed it would use monies from the GETFUND and petroleum revenues allocated to the Ghana National Petroleum Corporation (GNPC).

The source of funding for the NPP’s 2016 campaign promise to provide free education became a subject of discussion the past week.

It was the Senior Minister Yaw Osafo Maafo who first suggested government could use the Heritage Fund estimated to be about $268 million to fund the programme which is estimated to cost GHC3.6billion yearly

But this Fund according to the law is reserved for a generation of Ghanaians who are expected to find Ghana’s petroleum resources depleted.

Using the fund now would deprive the next generation of savings reserved for them, critics say. Clarifications have come from the Finance Minister Ken Ofori-Atta who has assured critics that government would not touch the Heritage Fund.

The funding for free SHS was, however, a subject of discussion on Joy FM/MultiTV’s political news analysis show Newsfile Saturday.

Managing editor of the New Crusading Guide newspaper Kwaku Baako said the NPP has not been unsure about where to find money to pay for the policy.

“Let’s not create the impression that all along the NPP had not indicated sources of funding”, he said and referred to Akufo-Addo’s presentation at the IEA Evening Encounter.

Quoting a statement read by Akufo-Addo, the veteran journalist read “He says a percentage of the oil revenues allocated to the GNPC, and for the funding f the budget, as well as a greater percentage of the GETFUND, will be used for the funding of the programme”.

The GETFund was established on 25th August 2000 in accordance with ACT 581. GETFund received an allocation of GH¢843.9million in the 2015 budget.

On the other hand, Ghana has earned $3.208 billion from petroleum revenue for the production of 161.7 million barrels of crude oil between 2011 and 2015.

Giving further details, Kwaku Baako said the NPP had committed to slashing by half, a 30 percent allocation of oil revenues given to the GNPC which is used to for research into onshore oil discovery and capacity building. As at 2015, the GNPC has $968.8 million in oil cash.

Referring to a document, he indicated that the NPP government plans to fund free SHS by using 60 percent of oil revenues dedicated annually to support the budget.

Ghana’s oil monies dedicated to the budget is to fund 12 priority areas. Government is free to choose any four of these areas to fund for three years. They include road/highway projects, water resources, transportation infrastructure, agricultural modernisation, works and housing and educational infrastructure.

The NPP had expressed disappointment that oil revenues are “spread thinly” on several projects and programmes and plans to consolidate these monies to pay for this social intervention programme.

The government also wants to redirect 40% of GETFUND allocations and dedicate this to free education. GETFUND is funded with 2.5 percent VAT.

“So it is not as if they hadn’t had any idea as to where they will tap in to finance the program” Baako finished.

But deputy Finance minister Mona Quartey while pleased about the existence of a plan nonetheless warned that slashing 50% of monies meant for GNPC will hurt the country’s push to develop its oil and gas potential.

“With an oil and gas industry still nascent and you want to cut GNPC allocation? That is going to affect so many things” she said.

On his part, Executive Director of Integrated Social Development Centre (ISODEC) Dr. Steve Manteaw expressed discontent about what he believes is a fixation with Ghana’s oil revenues.

He believes an over-reliance on oil cash is a symptom that Ghana could be suffering from the Dutch disease.

He said revenues accruing from oil is to only 3% of total government revenue it collects in a year. He is worried that “we are abandoning the 97% and we are chasing just three per cent. Let’s be careful”.

He, however, backed the plan to use oil funds but added government must also look at revenues from gold exports.

He said he was against the use of the Heritage Fund and called on government to go the Ugandan way of imposing a free SHS tax.

How oil revenue is distributed

The Petroleum Management Act (PMA) spells out the distribution plan for petroleum revenue government receives. It divides the cash into the Annual Budget Funding Amount (ABFA), Ghana Heritage Fund (GHF), Ghana Stabilisation Fund (GSF) and Ghana National Petroleum Corporation (GNPC).

In descending order, the ABFA receives the highest percentage of 40%, followed by the GNPC which bags 30%. The GSF is allocated 21% while the GHF received nine per cent.

Between 2011 and 2015, the ABFA has received $1.42 billion; the GNPC, $968.8 million,the GSF, $604.35 million and the GHF, $249.92 million.

The Public Interest and Accountability Committee (PIAC) has provided details of how oil revenue dedicated to the budget has been spent. The breakdown include road/highway projects, GH¢745.009 million; water resources, works and housing, GH¢72,156 million; educational infrastructure, GH¢70,214 million; transport infrastructure, GH¢105,066 million, and agricultural modernisation, GH¢328,784 million.

The state of GETFUND

The Fund is grown through a 2.5 percent VAT on goods and services. Section Four of the GETFund Act, 2000 (Act 581) stipulates that states that government allocates the 2.5% within 30 days of receipt of all the VAT invoices.

But delays in payments is common. Between 2005 to 2013, the delays could take between two to nine months before government releases allocations.

The GETFUND has also been in arrears for sometime now. In 2014, a High Court ruled that the Finance ministry pay GH¢500 million arrears accrued from June 2013 to July 2014 to enable the statutory Fund meet its responsibilities.

As at January 2015, the arrears had dropped to about GH¢325 million.

Ghana spends at least 30 per cent of the national budget on the educational sector, a figure that is expected to increase under the NPP government.

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