Ghana’s Finance Minister is seeking to create two investment funds fed by future oil revenues that would fill budget gaps and preserve the West African nation’s hoped-for energy wealth, according to a draft of the proposal posted on the ministry’s website.
The proposal would also rule out government borrowing against future crude production in the country, a leading cocoa and gold producer which is on track to be a commercial oil exporter by the end of this year.
“In putting together this proposal, we have been keenly aware of the so-called ‘oil curse’ that has come to be associated with oil rich, developing countries,” according to the draft. “The overarching concern for many Ghanaians is that petroleum wealth should be a blessing not a curse.”
The proposal, a version of which is expected to be presented soon to Parliament as a bill, calls for the creation of an independent account at the central bank for collecting all oil revenues.
The revenues will be primarily aimed toward supporting budget spending, including for agriculture and infrastructure projects, but surplus revenues will be diverted quarterly into two funds – the Ghana Heritage Fund and the Ghana Stabilization Fund, according to the draft.
The funds would be put into investment grade securities, including government bonds, it said.
The Ghana Heritage Fund would provide long-term preservation of Ghana’s oil wealth along with a stream of interest revenue, while the Ghana Stabilization Fund would be used to fill short-term budget gaps, according to the draft.
London-based Tullow Oil says it will begin production from Ghana’s offshore Jubilee oil field in November, with output reaching 120 000 barrels per day within six months of startup.