The Public Interest and Accountability Committee (PIAC) has asked government to clarify the whereabouts of an unspent GH?403.74million of petroleum revenue – allocated to the Annual Budget Funding Amount (ABFA) in 2017.
PIAC, in its 2017 Annual Report, said government breached the Petroleum Revenue Management Act (PRMA) 2011, Act 815, in the disbursement of petroleum revenue.
From PIAC’s analysis of the 2017 data on the management and use of petroleum revenues supplied by the Ministry of Finance (MoF), it emerged that out of the GH¢736.03million ABFA budgeted for use on various earmarked projects and expenditures for the year, government spent GH¢332.29million – leaving an unspent amount of GH¢403.74million.
This, the PIAC said, raises concerns about the level of budget compliance with respect to the ABFA allocation; and secondly, about the country’s absorptive capacity, presuming that the money has indeed not been utilised.
Furthermore, the analysis revealed that out of the GH¢332.29million spent, GH¢202.38million went into the Free SHS programme and scholarships – which are undoubtedly recurrent expenditure.
This, when added to expenditures from other priority areas, constitutes 63 percent of government’s utilisation of ABFA on recurrent items. In other words, only 37 percent was spent on capital investments, which is inconsistent with provisions of the PRMA.
It was against this backdrop that PIAC noted in its 2017 Annual Report that the expenditure as reported by MoF does not conform with the requirement to spend at least 70% of the ABFA on Capital Expenditure.
It thus recommended that the MoF must therefore comply with the provisions of Section 21(4) of Act 815 in respect of public investment expenditure.
“The fact that the ABFA allocation was not fully utilised, even though the entire amount had been budgeted for, suggests budget non-compliance on the part of the MoF. Parliament should take steps to ensure that the minister complies with the budget as approved.”
However, government said the total amount utilised was GH¢332.29million – well within the budget ceiling of GH¢796.32million and representing about 41.7 percent utilisation.
The Minister for Information, Dr. Mustapha Abdul-Hamid, explained that this was well within the allocation for the year – adding that what remains is a balance of GH¢464.02million for 2017, which is the available balance.
But in a sharp rebuttal to government’s response, PIAC said while it has no reason to doubt government’s position, “We believe it will better serve the cause of transparency and accountability by providing further and better indication of where the money has been lodged.
“Again, the point has to be made that since the ABFA amount was allocated from the Petroleum Holding Fund, it is only proper to have returned the unspent portion to the chest for re-budgeting in the succeeding year.”
PIAC observed that this is not the first time the allocated ABFA has not been fully utilised. In 2016 an amount of GH¢77million was not spent, but no explanation was given.
In 2017, the unspent amount jumped from GH¢77million to GH¢403.74million. PIAC is concerned that “If not checked, this development can provide cover for abuse of the petroleum revenues”.
“It bears noting that the rationale for having such a provision in place is to ensure that a greater portion of the petroleum revenue will be directed toward undertaking infrastructural projects/public investments that will bring further development in the country and help the country avoid the bad experiences in the mining sector – where revenues have been spent consistently for decades on recurrent expenditures, and as a result of which the sector has not been able to make any significant contribution to development of the country.
PIAC insisted that if government’s argument is sustained, “What it will mean is that, in preparing its budget, Government can make the effort to comply with the face value of the provision, but when it comes to actual practice/expenditure it can deviate and do as it pleases – making nonsense of the provision’s intentions”.
This, according to PIAC, portends great risk of political abuse of petroleum revenues in ways that could undermine the efficiency of ABFA utilisation.
PIAC believes that the presumption in that provision was full utilisation of the entire ABFA allocation for that year, with the purpose being a greater portion spent on capital and not recurrent expenditure.