A financial expert has suggested that Ghana invest a percentage of the money it earns from oil and gas in key sectors of the domestic economy.
Dr. John Gatsi, lecturer at the School of Business at the University of Cape Coast, made the suggestion in an interview with Xinhua here in the Ashanti Regional (Provincial) capital, 270 km north of Accra.
?I do know that there are international reserve benefits for investing the Heritage Fund outside the country but, to a large extent, I believe the proper thing to do is to diversify the investment whereby we have some percentage of the Fund invested in key sectors of the economy,? he said.
Gatsi observed that it was not proper for the West African country to invest its entire heritage fund outside the country, judging from the fact that countries were not immune to risks.
He cited the case of several European countries which suffered a collapse of their financial institutions, high government debt, and rapidly rising bond yield spreads in government securities in 2009.
The European sovereign debt crisis, also referred to as the Eurozone crisis, started with the collapse of Iceland’s banking system and spread primarily to Greece, Ireland and Portugal.
This led to a crisis of confidence for European businesses and economies, he said, adding that the worst hit states faced strong rise of interest rate spreads for government bonds, as a result of investor concerns about their future debt sustainability.
The states were rescued by sovereign bailout programs delivered jointly by the International Monetary Fund and European Commission, with additional support at the technical level by the European Central Bank.
?I think the middle way should be some portions of the Stabilization Fund and the Heritage Fund should be invested in the country, especially in key sectors of the economy that will drive infrastructure and at the same time ensure that those investments are safe for the preservation of our fund.
?That is why we should be thinking about investing part of the money in the country in areas that we classify as less risky and have the ability to protect the investment.?
He noted that Nigeria, the largest oil producer in West Africa (2.2 million barrels of oil per day), maintained part of its oil revenue in its domestic economy and recommended that Ghana must take a cue from that country.
?But we can learn from Nigeria. They are investing part of their money in the infrastructure sector in the country and that is contributing to infrastructure development and at the same time ensuring preservation of those funds, so I think that is the best way forward,? Dr. Gatsi said.
Nuertey Adzeman, Executive Director for the Ghana Oil and Gas Service Providers Association (GOGSPA), in an interview with Xinhua recently called on the government to invest part of the oil revenue in other sectors of the local economy.
He argued that the economy of the West African country could not be run on oil and gas since the resource would not be available after some time.
Ghana discovered oil in commercial quantities in July 2007 and commenced production in November 2010.
The country, under its Petroleum Revenue Management Act (PRMA) 2011, Act 815, set up the Petroleum Holding Funds (PHFs) and the Ghana Petroleum Funds (GPFs), made up of the Stabilization and Heritage Funds.
The law also prescribes how revenue generated from the production of the mineral should be utilized.
It specifies that 70 percent of the net oil revenue generated should be used to support the Annual Budget Funding Amount (ABFA), with 30 percent going to the Ghana Petroleum Funds (GPFs).
The law also stipulates that the management of petroleum revenue and savings shall always be carried out with the highest internationally acceptable standards of transparency and good governance. Enditem