The Finance Committee of Parliament has concluded a meeting on the government’s request for the lowering of the cap on the Stabilization Fund from US$300 million to US$100 million.
According to Citi News sources at the meeting, the Committee could not conclusively deal with the matter at hand due to the absence of the critical documents that explain in detail what the excess funds to accrue from the lowering of the cap will be used for.
The Finance Minister, Ken Ofori-Atta, in a speech on Monday, March 30, told the House that money from the Stabilization Fund will be used to set up the Coronavirus Alleviation Programme to mitigate the economic impact of the coronavirus pandemic.
The Minister will be required to provide all the details the Committee is asking for before a determination is made on his request.
A member of the Committee, Daniel Okyem Aboakye said, “There was a request for us to consider about US$200 million drawn out from the Stabilization fund and the Committee is basically asking if they have a Iittle bit of details before we bring our report to the Chamber. We are not in ordinary times. We understand the need to do what we have to do but that does not mean that the Finance Committee will just say yes to everything that has to go to the extent that we can ask to know what these funds are going to be used for is the right thing to do. Even though we are the majority and we can just support the government, we just want additional details so that we can attach to the report for considerations on the Floor when we bring it there.”
The Finance Minister, Ken Ofori-Atta, in Parliament on Monday suggested that Parliament should amend the relevant laws to lower the cap of the Stabilisation Fund from $300 million to $100 million to enable the government scoop the excess funds to bridge the gap created by the economic impact of the pandemic.
“Mr. Speaker… Since we are faced with extraordinary circumstances which require extraordinary measures, we would like to propose the following measures for the consideration and support of the House – Lower the cap on the Ghana Stabilisation Fund (GSF) from the current US$300 million to US$100 million in accordance with Section 23 (3) of the Petroleum Revenue Management Act (PRMA).”
“This measure will enable the excess amount in the GSF account over the US$100 million cap to be transferred into the Contingency Fund, consistent with Section 23 (4) of the PRMA. The amount transferred into the Contingency Fund will be used to fund the Coronavirus Alleviation Programme (CAP). Through this process, an estimated GHȼ1,250 million will be transferred into the Contingency Fund to Fund the CAP. Mr. Speaker, we, therefore, wish to seek approval from this August House for the Finance Minister to use the Funds which will be available in the Contingency Fund to fund the Coronavirus Alleviation Programm,” he said.
This came after he was instructed by President Akufo-Addo to assess the economic impact measures put in place to combat the novel coronavirus will have on the country.
In response to this, Mr. Ofori-Atta said the country is set to lose GHS9.505 billion looking at the effects the pandemic is having on the country.
The stated amount will be 2.5 percent of Ghana’s revised GDP.
“Mr. Speaker, the total estimated fiscal impact from the shortfall in petroleum receipts, shortfall import duties, the shortfall in other tax revenues, the cost of the preparedness plan, and the cost of Coronavirus Alleviation Programme is GHS9,505 million,” he said in Parliament.
Use of Heritage Fund
The Finance Minister also called for the amendment of the Petroleum Revenue Management Act (PRMA) to allow the government to utilize portions of the Heritage Fund to fight the Coronavirus outbreak.
“Amend the PRMA to allow a withdrawal from the Ghana Heritage Fund to undertake emergency expenditures in periods of national emergency. There is an estimated US$591.1 million in the Ghana Heritage Fund.”
This proposal, however, has strongly been shut down by the Minority in Parliament, giving the reason that the Heritage Fund has a purpose to serve for future generations and therefore should not be touched.