THE Public Interest and Accountability Committee (PIAC) has urged the Auditor-General (AG) to conduct a special audit into the $2.6 billion (GH₵9.41 billion) oil money allocated to the Annual Budget Funding Amount (ABFA) over the 10 years since the country discovered oil.
According to PIAC, “The ABFA which is the amount of petroleum revenues allotted to support the country’s annual budget had the highest allocation (40 per cent) of the $6.55 billion earnings Ghana made within the period, but its overall impact had been minimal, delayed, or negligible.”
In this regard, the Committee recommended that the audit should focus on sectoral allocations of the ABFA in line with requirements of the Petroleum Revenue Management Act (PRMA), 2011 (Act 815) and the Public Financial Management Act.
PIAC captured this in a report titled “Assessment of the management and use of Ghana’s Petroleum Revenues (2011-2020)” which examined how the country’s petroleum resource had been utilised over the 10-year-period since oil was discovered in commercial quantities.
According to the report launched on Tuesday, the ABFA had been spent on seven out of the 12 priority areas specified under the PRMA with roads, railways, and other infrastructure receiving GH₵4.56 billion (53.51 per cent)
Physical Infrastructure and service delivery in education had GH₵1.85 billion (21.74 per cent) of which government’s flagship programmes such as the Free Senior High School policy accounts for most of the ABFA education spending.
It said expenditure on amortisation of loans for oil and gas infrastructure got GH₵860.24 million (10.11 per cent); Agriculture modernisation, GH₵682.91 million (8.02 per cent); Capacity building (including oil and gas)GH₵358.00 million (4.21 per cent) and Physical infrastructure and service delivery in health had GH₵118.82 million (1.40 per cent).
Ghana Infrastructure Investment Fund (GIIF) got GH₵43.99 million (0.52 per cent); Industrialisation,GH₵31.80 billion (0.37 per cent) and PIAC had GH₵11.83 million (0.14 per cent) of total ABFA allocations.
The remaining unutilised amounts went into the Consolidated Fund under government’s Treasury Single Account (TSA) policy.
The report said some of the ABFA-funded projects were imposed on beneficiaries while rules governing the selection of spending areas in the PRMA were not consistent with resource allocation structures under the budget, posing potential risks of non-compliance to efficient prioritisation as required under the PRMA.
It said there was no mechanism to ensure that ABFA disbursements made across multiple sector MDAs under the selected priority area were well coordinated to generate optimum social returns.
“Many stakeholders believe ABFA has not delivered their expectations in maximising the rate of economic development and enhancing their well-being”, it said.
According to the report, the potential for ABFA to deliver optimal outcomes is hinged on several underlying macro-fiscal factors, including the robustness of the existing public financial management system, efficient budget preparation, implementation, monitoring and accountability system and efficient macroeconomic management systems.
“The evidence points to weaknesses in these underlying factors; hence the implementation of ABFA in the last decade has suffered from broader challenges associated with macro-fiscal management.
Regarding ABFA utilisation, the report said “The PRMA falls short of prescribing the exact specifics or definition of these 12 areas, leaving room for a blend and potential abuse by the political leadership of the day.”
“We advocate for official public criteria to guide the technical prioritisation of ABFA projects the Ministry of Finance and beneficiary MDAs,” it report recommended.
BY JONATHAN DONKOR
The post Conduct special audit into $2.6 billion oil revenue allocation to ABFA – PIAC appeared first on Ghanaian Times.