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7 Policy pointers to next govt on extractive sector

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Ghana’s 2016 election is an important opportunity for political parties to share their key priorities in the extractive sector with citizens. Despite significant improvements, the country continues to struggle to effectively manage its natural resources, with planning challenges and inconsistent implementation of policies still the norm.

This election brief provides more targeted recommendations on the extractive sector for the next government:

• Develop an extractive sector vision and plan

Ghana’s history of shaping and delivering long-term national development plans has been disappointing.

To effectively leverage opportunities in the extractive sector, the next government should strengthen extractive sector planning and increase citizen involvement across all aspects of decision-making.

The next government should ensure that development priorities are costed and published. A clear and coordinated vision for the extractive sector guides governments to develop a strategy that is comprehensive and inclusive.

An immediate priority of the next government should be to articulate clear development objectives to guide the management of oil, gas and mining resources within a broader national development plan for Ghana.

 

• Ensure the Petroleum Revenue Management Act (PRMA) is consistent with Ghana’s overall fiscal framework

Effective and efficient management of petroleum revenues requires a framework that smoothens year-to-year expenditure in order to address revenue volatility, ensures long term fiscal sustainability, and uses a stable and fair revenue sharing formula.

Ghana’s oil and gas sector, while burgeoning, contributes only a small fraction of the country’s GDP; this may dwindle even more if crude oil prices fall further.

After five years of oil production, important lessons have been learned from the implementation of the PRMA. Although the PRMA has effectively delivered improvements in transparency in revenue allocation and utilisation, it has not adequately addressed issues related to revenue volatility, expenditure smoothing, or contributed to overall fiscal sustainability.

This is partly due to the lack of a synchronised public financial management framework capable of addressing Ghana’s growing fiscal challenges.

The new Public Financial Management (PFM) Law is part of Ghana’s broad-based reforms to improve fiscal discipline and sustainability. With the PRMA only focused on the petroleum sector (a small part of the economy), growing economy-wide fiscal challenges could continue to undermine its objective as a fiscal framework.

The next government should ensure that the PRMA is situated within and consistent with an overall public financial management framework for Ghana

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Reporting Oil and Gas project was launched on 4th June 2009atTakoradi, Western Region, Ghana by Penplusbytes (PPB – www.penplusbytes.org) with the vision of providing a one stop online information and knowledge about Ghana’s oil and gas sector
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