If the country is to use its petroleum resources to achieve economic growth and transformation, there must be a long-term national development plan, the Public Interest and Accountability Committee (PIAC) – a state watchdog on oil revenue management and utilisation – has advocated.
The Committee said the current practice whereby use of petroleum revenues is left to the whims and discretion of politicians is denying the country a chance to use its hydrocarbon resources as a catalyst for economic growth and development. Ideally, it said, there should in the long haul be a comprehensive national policy that outlives political regimes.
“PIAC reiterates the need for a long-term National Development Plan, as stipulated in Section 21(2)(d) of the Petroleum Revenue Management Act (PRMA) to guide the spending of petroleum revenues, as the current practice allows for ministerial discretion in the selection of priority areas,” it said in its 2020 Annual Report.
The PRMA requires use of the annual allocation to the Annual Budget Funding Amount (ABFA) to be guided by a long-term national development plan approved by Parliament. In the absence of this plan, and with a view to maximising the impact of using the ABFA, the Minister for Finance shall prioritise not more than four areas specified in the Act.
The selected priority areas are to be reviewed every three years and presented to Parliament for approval by the Minister for Finance, before implementation. The year 2020 marked the selection and implementation of new priority areas by government for the period 2020 – 2022, as the period for the previous priority areas came to an end in 2019.
Based on information provided by the ministry, PIAC indicated that the new priority areas selected include: agriculture; road, rail and other critical infrastructure development; physical infrastructure and service delivery in education and health; and industrialisation.
The report however found that the 2020 – 2022 new priority areas selected for ABFA disbursement were not presented to Parliament for approval in the 2020 Budget Statement and Economic Policy, as required by the PRMA. Parliament’s approval is needed to ensure soundness, impact and relevance of the priority areas, as well as for monitoring and evaluation.
Consequently, after 10 years of oil production, PIAC said there is very little to point to as tangible achievements from the country’s hydrocarbon resources – hence the need for a long-term national development policy to be hastened to guide utilisation of petroleum revenues.
It also believes that such a plan will help to curb frequent abuses of the PRMA and put the country on a path of sustainable economic growth and development, using oil as a catalyst.
Apart from this, the plan will also put to bed the issue of thin-spreading –engaging in too many projects, which often leads to delays, shoddy work and poor execution, the report reiterated.
“The Ministry of Finance should ensure that priority areas selected are approved by Parliament before implementation, as required by Section 21 (5) of the PRMA,” the report further admonished.
Meanwhile, contrary to the PRMA, it also revealed that an unutilised amount of GH¢827.60million from 2017 – 2019 was spent to partially meet the shortfall in ABFA receipts caused by impacts from the COVID-19 pandemic and its associated effects on crude oil prices globally.
The Committee however believes that the ABFA should not be used to serve the purpose of filling expenditure gaps at times of revenue shortfall in the budget – but rather the Stabilisation Fund, which was set up so that government can draw from it in times of shocks to the economy.