22 July 2014

Ghana: ACEP Holds Roundtable Discussion On Tracking Budget Expenditure of the Extractive Revenues

press release

Transparency in petroleum revenue use has improved in 2014 due to the publication by government of more disaggregated data on projects funded with petroleum revenues, Dr Mohammed Amin Adam, Executive Director of the Africa Centre for Energy Policy, has disclosed.

Dr Mohammed Amin Adam, therefore, urged Civil Society Organisations (CSOs) to develop mechanisms to use the improved data environment to monitor the projects that are funded with petroleum revenues to ensure the delivery of quality projects on schedule and ensure value for money in the investment of petroleum revenues.

He noted, however, that efficiency of spending petroleum revenues remained a challenge as petroleum revenues were thinly distributed over many projects most of which would take much longer time to complete without regular financing.

He said the spending of oil revenues should be based on an investment plan guided by a long-term national development or medium-term development framework which would help provide consistency in the use of petroleum revenues for projects that added value to the economy on a sustainable basis.

Dr Adam was addressing a Roundtable Discussion on the Tracking of the Budget Expenditure of the Extractive Revenues in Ghana in Accra, yesterday.

The meeting, which was held on the theme: 'Linking Expenditure with Priorities in Pro-poor sectors,' was organised by the Africa Centre for Energy Policy in collaboration with Oxfam and the Financial Accountability & Transparency, Africa (FAT-Africa).

Dr Adam noted that although the proportion of petroleum revenues in the total budget was insignificant in nominal terms, the Government capital programme could suffer substantially without those revenues.

He said the use of petroleum revenues for capital investment should be encouraged as it did not only fulfil the requirement of Section 21(4) of the Petroleum Revenue Management Act (Act 815), but also built the capital base of the economy to accelerate medium to long-term economic growth.

He noted that the budget for the pro-poor sectors of education and agriculture mainly relied on donor support for investment, adding that donor funding was likely to scale down as a result of Ghana's status as a middle-income country. He said unless the tax effort was increased and the use of petroleum revenues well-prioritized to provide fiscal relief to neutralize the funding gap, pro-poor investments would be exposed to financial vulnerabilities.

Dr Amin urged government to commit a substantial portion of the petroleum revenues to finance the proposed free Senior High School programme to ensure the development of an educated and skilled workforce, capable of transforming the economy in the long-term.

Government, he said, should also apply petroleum revenues to expand the agriculture sector, particularly by providing input, technology and marketing support to smallholder farmers.

The recommendations were based on the findings of a study conducted to pool together budgetary information and data from different publicly-available official documents to track budget revenues and expenditure, and to specifically track the allocation and utilization of extractive resource revenues in the Budget.

The study aimed to address the information gap on the budget information, identify budget priorities for spending resource revenues in the pro-poor sectors of education, health and agriculture, and establish grounds for transparency and accountability.

Findings from the study are expected to provide the basis for civil society advocacy to influence budgetary allocation of resource revenues to pro-poor sectors in the 2015 Budget.

According to Dr Adam, the study indicated that petroleum revenues contributed between 0-10% of the capital budget for programmes such as institutional development, finance and administration, policy planning budgeting, monitoring and evaluation, productivity improvement and diversification of livelihoods.

The findings, Dr Adam said, showed that petroleum revenues contributed between 30-70% of the capital budget for the programmes such as mechanization, irrigation and water management, promotion of cash crops & livestock production and the strengthening Farmer-Based Organisations (FBOs) & Out-grower schemes.

He said the findings also indicated that petroleum revenues contributed between 100% of the capital budget for programmes such as urban & peri-urban agriculture support, marketing of agricultural produce/products and the management of land and environment.

Again, he said, the findings revealed that petroleum revenues constituted about 23% of the capital budget for food and agriculture while government budget priorities in the agriculture sector targeted small-holder farming and could contribute to accelerated poverty reduction.

Dr Adam said government had relied on tax revenues and donor financing for its budget, but with the discovery of oil and gas in commercial quantities and the attainment of a middle income status, donor funding was on the decline while Ghana was also unlikely to get concessionary facilities.

He said in the face of these fiscal challenges, petroleum revenues provided the much-needed fiscal relief, even though it remained inadequate at the current modest levels of oil production. Budget priorities, he said, should, therefore, be based on two objectives, namely allocating budgetary resources to productive areas to accelerate economic growth and development and spending efficiently to achieve value for money in budget funded projects.

Dr Adam said it was for this reason that budget tracking had become an important tool for monitoring and measuring the extent to which these objectives had been met.

In a presentation, Mr Omar Ortez, Senior Policy Adviser of the Active Citizenship Programme of OXFAM, an international American Non-Governmental Organisation (NGO), stressed the need for transparency and accountability in the management and utilisation of petroleum resources.

Mr Ortez said the voices from below ought to determine which projects should be implemented with the available resources in their communities.

He said OXFAM was committed to working with organisations like ACEP, Parliament, the Auditor-General's Department and the Ministry of Finance, among others, to influence policy decisions for national development.

For his part, Mr Abdulkarim Mohammed, Regional Programmes Advisor, Active Citizenship Programme, said it would take active citizens to ensure that there was transparency and accountability in the management and utilisation of national resources.

Mr Mohammed said to be able to discharge that duty, citizens ought to be well-informed and equipped with relevant information and be well-motivated to demand accountability from duty bearers.

In his remarks, Mr Kwame Jantuah, Chief Executive Officer (CEO) of the African Energy Consortium Ltd. and Chairman for the occasion, said communication was key in promoting transparency and accountability in the management and utilisation of petroleum resources.

Mr Jantuah described budget tracking as extremely important in the management of petroleum resources and commended OXFAM and ACEP for the initiative.

He noted that the media had a huge role to play in ensuring transparency and accountability in the management and utilisation of petroleum resources and urged it to build their capacity for that responsibility.

Source: ISD (G.D. Zaney)

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