The Institute of Statistical, Social and Economic Research (ISSER) has urged government to start planning how the oil funds generated from production next year would be used to grow the economy.
Presenting a paper on "Oil and Ghana's Economy: Fiscal management challenges, Dr Sam Mensah, senior consultant at SEM International Associates limited, said the proposed oil fund to be set up would not automatically lead to better fiscal management.
However, the potential value of such a fund lies in the details of the fund's institutional procedures.
He said the fund is to facilitate the accumulation of large, volatile and temporary revenues when the times were good; stabilise public spending; and finance public expenditure when the oil revenues dried up.
Dr Mensah said fiscal regimes include Specification of Revenue to Government, royalties, Income Tax Revenue Collection, revenue reporting while the fiscal planning and management involves rules and procedures for the allocation of revenue defining end uses that maximize long-run benefits to the country rules and procedures for the allocation of revenue.
He said regular public disclosure, accountability to elected representatives, independent audit of activities, clear investment strategy and competition in appointment of investment managers are requirements for efficient management of oil fund.
Dr. Mensah said the success of the oil fund in ensuring long-term fiscal sustainability would depend to a large extent on the Sound fiscal policies and the general quality of institutions and public financial management.
He said technical solutions such as the stabilization fund and fiscal rules will not work unless constituencies can be developed in support of such measures.
He advised government to use combination of tools in dealing with fiscal challenges like investing in physical assets, pay off external debt and adopting conservative, transparent and flexible budgeting.
Mr. Danaa Nantogmah, programme coordinator of Friedrich- Ebert-Stiftung Foundation, said for the proposed oil fund to be an effective tool for efficient fiscal policy management, there should be high level of transparency on its status and operations including a unified budgetary process and public reporting of payments, holdings and investment.
He also said key decisions should be made by a body representing the interest of diverse political constituencies in the country.
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