The country need to resist the urge to expend petroleum revenues at the expense of debt management, investment and contingency goals, a Former Finance Minister, Mr. Seth Terkper, has cautioned.
Supporting the argument initiated by the Public Interest and Accountability Committee (PIAC) that portions of the petroleum revenues were unaccounted for and possibly applied on projects and programmes outside the defined scope, Mr. Terkper during a telephone interview with B&FT disagreed with government’s explanation.
The government had earlier attributed the discrepancies in the allocation of petroleum revenues to the movement of the funds between the Treasury Single Account (TSA) and the Treasury Main Account (T-Main).
“The explanation that the Ministry of Finance (MoF) transferred GH¢403.7 million from the T-Main to the TSA meant that they were ‘swept’ and consequently used for consumption,” Mr Terkper said.
“Sweeping is a financial activity that allows managers of a fund to transfer revenues in excess of a particular amount into another fund or account. The TSA is a cash and treasury management tool while the T-Main pools and often “sweeps” multiple accounts, including some public funds, to legally allocate money and prevent their deliberate misuse by banks and other agencies,” he said.
Mr. Terkper indicated that the action of the ministry through the Controller and Accountant General’s Department (CAGD) was inconsistent with aspects of the 1992 Constitution.“The conventional goal of sweeping to centralize idle funds must respect the Public Financial Management Act (PRMA) rules.”
We have stopped transferring money from the ABFA to GIIF and, since paying off the 2007 Sovereign Bond, we have not made any further redemptions, even though we are adding to total public debt.
The current attempt at ‘sweeping’, presumably for consumption or recurrent expenditure, will further dilute the purpose of the PRMA.
Past MOF ‘sweeps’ resulted in inevitable mistakes and reversals were made for SOE and other statutory funds. Governments always come under pressure to move funds from buffer or stabilisation and investments funds into consumption. To yield is not to use our natural resource endowments effectively, to achieve a desirable fiscal balance.
In 2014 and 2015, government came under intense pressure under the IMF programme to ’sweep’ the Sinking Fund and GIIF to reduce the deficit, even after the Minister appeared in Parliament to reduce expenditure.
Had we succumbed, we would have had difficulty in redeeming the 2007 Bond as well as missed the opportunity to use GIIF to support construction of the elegant Terminal Three at Kotoka International Airport (KIA).
More importantly, we will stand accused, as some nations, for using our oil revenues for consumption. The PRMA is achieving its investment, spending, stabiliser, heritage and contingency goals and we must protect it, he said.
|Distribution of Petroleum Receipts (%): 2011-2017 e: MoF Petroleum reports