The Civil Society Platform on IMF Bailout has questioned government’s upward adjustment in the budget deficit from 6.8 percent to 7.3 percent in the revised 2015 budget.
The platform, at a press conference in Accra yesterday, said the IMF has decided to ignore certain critical things because it wants government to succeed in its bailout arrangement with Ghana.
Dr Mohamed Amin Adam, an executive member of the platform, said : “An example is the revised deficit. The IMF wasn’t in favour but government told them we have money sitting in the Stabilization Fund and therefore it would take money from the Stabilization Fund and settle the deficit.
“And so do you know what government has done in the revised budget? The Stabilization Fund which was supposed to be $300 million from the beginning of 2015, and rise up to $400 million by the middle of 2015 has been slashed by $253 million.”
According to Dr Adam, the Finance Minister has now put the maximum cap at GH¢150 million which culminated in a downward revision to $47 million.
“The minister is removing $253 million from the Stabilization Fund to finance the revised budget deficit, and the IMF accepted that because it wants government to succeed.”
Implication
“By the afore-stated arrangement, anytime Ghana experiences revenue shortfalls from oil, we would have no money in the Stabilization Fund to cushion the budget. So if next year, oil prices do not go up and we experience a revenue shortfall, we would only have GH¢150 million sitting in the Stabilization Fund from now till the end of 2015,” he said.
“So while the Supplementary Budget has taken effect, the minister can remove the difference and very soon he will do that. Do you know why the minister hasn’t removed it yet? It is because of the zero-financing by the Bank of Ghana.
BoG clears government chest
“The Bank of Ghana (BoG) swept all positive government balances because government is owing them, they have taken all positive balances from government’s account, including the Sinking Fund where the money from the Stabilization Fund would go to for them to use in paying debt.
“They are now discussing with the Bank of Ghana (BoG) how to keep the Sinking Fund away from the Bank of Ghana in order that they cannot sweep it but they have not been able to do that yet.
“$100 million from the Sinking Fund has been swept by the Bank of Ghana to repay government’s indebtedness to the bank. And so what will happen to the $253 they are removing from the Stabilization Fund and putting in the Sinking Fund? The Bank of Ghana will sweep it again.
Silence on LPG revenues
Dr Adam also mentioned that the entire budget did not even touch on revenues from LPG which are also supposed to be part of the oil revenues.
“While crude oil base deposits are declining because oil prices have gone down, that of LPG in the first half of the year did not decrease.
“We are paying for LPG. Half of the domestic requirement for LPG is now coming from Atuabo and we are paying for it at commercial rates. So you cannot say that oil revenues have decreased without reporting how much we are getting from our LPG revenues, which are gas revenues.”
Gas revenues
“We are supposed to be getting $500 million every year from LPG and that is more than the reduction we have experienced in crude oil revenues. And so the net effect should not be a reduction in oil revenues. It should be an increase. As far as I am concerned, the deficit levels revised is worrying and Government hasn’t provided enough explanation on why the deficit should be revised upwards to 7.3 percent of GDP.”
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