Wednesday, 15 April 2020

Touch Heritage Fund ‘only’ as a bridge financing facility or temporary credit – Mould advises gov’t

Bawumia's role keeps flip-flopping – Alex Mould | Starr Fm


Adnan Adams Mohammed


A renowned financial and energy expert has added to calls on government to stay off its intention to seek permission to use the Ghana Heritage Fund as an emergency response fund to the fight against the global pandemic coronavirus (COVID-19).


Reechoing that, touching the Heritage Fund should be the absolute last option, and every government should resist the temptation of doing so irrespective of the cost of raising money elsewhere. But, the expert proposed that, the Heritage Fund should only be used as a bridge financing facility or a temporary line of credit to government.


Nonetheless, terms constituting such dire emergency situations to leverage the Heritage Fund need to be defined and agreed to, with a strong burden on government to prove beyond any doubt that they have exhausted all avenues to reducing costs and raising funds; only then should there be a National referendum to decide if these funds can be touched.


“Presently with the situation of the COVID-19 pandemic, if all options to raise money are exhausted and government is in a total bind to save human lives in the midst of this crisis, then in my view, the Heritage Fund should only be used as a bridge financing facility or a temporary line of credit to government”, Alex Mould, former Boss of Ghana National Petroleum Corporation (GNPC) advised the government.


This means that government must commit to, and replenish these funds within a clearly predefined repayment timeline with a dedicated source of funding– our future generations are counting on us for this.


Mr Mould expressed that, “In my opinion, the Finance Minister’s mention of the drawdown of the Heritage Fund, was not genuinely intended to generate approvals/buy-in to touch the fund on an immediate basis. I believe he mentioned it to prompt a debate amongst our law makers, and to test Ghanaians’ response to a possible drawdown of the fund, if serious considerations need to be made as a result of financial hardship in the country.


“When an institution (i.e. government) experiences a revenue shortage, the most prudent thing for the person in charge of finance to do, is to rally all the various heads of departments (in government's case the Ministers), to review budgets and institute draconian cuts in expenditure. This must include recurring and discretionary expenditure. The government should focus more on operations and maintenance expenditure, and postpone all new infrastructure and non-core expenditure i.e. the nice-to-haves.


“Since the government has not fully completed such cost-management activities there should be no mention, as yet, of utilizing the Heritage Fund. Any discussion, at this stage, of utilizing the Heritage fund denotes a fragile economy that is unable to withstand the stress tests of shocks to it.”