Ghana is likely to embrace feared 'dutch disease' or 'resource curse' soon, if the current expenditure pattern of the Annual Budget Funding Amount (ABFA), a portion of oil and gas revenue, does not change.
The former Ghana National Petroleum Corporation CEO, Alex Mould has reiterated his caution to the government to reconsider its decision to use almost 100% of the ABFA for consumption (Free SHS funding) or risk adding Ghana to the list of countries that experienced resource curse.
Currently, the government is using about 98 percent of the ABFA, which is supposed to be spent on four prioritized sectors of the economy, to fund only Free SHS (a minor component of the educational needs of the country).
Many other industry experts and civil society groups including the Public Interest Accountability Committee (PIAC) Chairman, Dr Steve Manteaw, IMANI Ghana among others have all asked government to revise its decision to use all the oil and gas revenue which per the Petroleum Revenue Management Act, supposed to be spent on four prioritised sectors of economy to help diversify the economy on free senior high to avoid the danger of 'resource curse'.
Mr Mould who disclosed this at the maiden Oil and Gas Conference at the University of East London in the United Kingdom as one of the few energy industry experts invited to speak on the topic, “Can Ghana avoid the oil curse?” noted that "I can sense danger in the foreseeable future if government does not as a matter of urgency reinvest the revenue in other productive sectors of the economy".
He reiterated that he has always questioned why the chunk of the oil revenue will go into funding Free Senior High School Education (FSHS).
"If you look at the 2018 budget, 75 to 98% was used on consumption (i.e Free SHS) with only 2% going into physical infrastructure whereas the budget was not more than 30% of ABFA going into goods and services versus capital expenditure (CAPEX)."
The renowned financial and energy expert gave a way out of possible 'resource curse' befalling the country.
"Let’s not forget oil curse arises out of an over-concentration on the resource as a cash cow. We, therefore, need to use oil revenue to diversify the economy.
"Agriculture and manufacturing immediately come to mind. There must be a conscious balance between spending on education on one hand and health, agriculture, and manufacturing on the other."
Section 21 of the PRMA requires that the Annual Budget Funding Amount (ABFA) shall be guided by a long-term national development plan. It also requires that not more than 70% of the ABFA shall be used for Public Investment expenditures. The goal of the ABFA utilization is to: Maximize economic development; Promote equality of economic opportunity; Promote even and balanced development of the regions.
However, in the absence of a long-term national development plan, the Law requires that the Minister of Finance obtains approval from Parliament to spend on not more than four priority areas such as agriculture, infrastructure, social investments, rural development among others.
But, Mr Mould is worried about the lack of a long-term development plan to direct a holistic national development agenda.
"As many of you who are observers of Ghana would know, we do not have a long-term development plan. So, the Government selects the projects from the broad areas specified in the Act. We end up with the little oil revenue spread too thinly across too many projects."
Source: Peacefmonline.com
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