Finance Minister requests review of Petroleum Act to allow use of Heritage Fund to fight coronavirus

The Finance Minister, Ken Ofori Atta, has asked Parliament to amend the amendment of the Petroleum Revenue Management Act (PRMA), to allow the government to access the Heritage Fund to help in the fight against the new coronavirus pandemic.

According to the Finance Minister, there is an estimated US$591.1 million in the Ghana Heritage Fund.

The Fund was created under the Petroleum Revenue Management Act (PRMA) (Act 815), 2011, to set aside a portion of petroleum revenue for the benefit of future generations.

Briefing the House Monday, March 30, 2020, on measures government has outlined to mitigate impact of decisions taken to reduce the rate at which the viral infection was being recorded in the country, Mr. Ofori Atta further sought the support of legislators, to amend the relevant laws to lower the cap of the Stabilisation Fund from $300 million to $100 million.

This he said will enable the government utilise the excess funds to support the government’s Coronavirus Alleviation Programme (CAP).

He said: “Through this process, an estimated GHȼ1,250 million will be transferred into the Contingency Fund to Fund the CAP” before tabling a number of requests before the House.

“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 Programme. 

b.            Arrange with BOG to defer interest payments on non-marketable instruments estimated at GHȼ1,222.8 million to 2022 and beyond;

c.             Adjust expenditures on Goods & Services and Capex downwards by GHȼ1,248 million;

d.            Secure the World Bank DPO of GHȼ1,716 million;

e.            Secure the IMF Rapid Credit Facility of GHȼ3,145 million;

f.             Reduce the proportion of Net Carried and Participating Interest due GNPC from 30% to 15%;

g.            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.”

Mr. Ofori Atta explained that, even after reflecting the proposed measures, the resulting fiscal deficit as a percentage of GDP is in excess of the 5% threshold stipulated by the Fiscal Responsibility Act, 2018 (Act 982). In addition, the primary balance is a deficit equivalent to 1.1% of GDP contrary to the positive balance prescribed by the Fiscal Responsibility Act, he stated.

“The extraordinary circumstances posed by the novel coronavirus pandemic (a health epidemic) with significant impact on the macro-fiscal operations of Government certainly has implications on the fiscal rules as outlined in the Fiscal Responsibility law. Mr. Speaker we will continue to monitor the fiscal situation and take responsible and appropriate decision in due course,” the Finance Minister added.