2021 Resource Governance Index: Ghana scores 85 out of 100 in oil and gas sector revenue management
Ghana’s management of revenues received from the oil and gas sector has been scored 85 points out of 100 by the Natural Resource Governance Institute (NRGI) in its 2021 Resource Governance Index (RGI).
The score attained by Ghana in the NRGI’s 2021 RGI compares favorably to the 51 points scored in the NRGI’s 2017 RGI, representing a 34 point score increase in oil revenue management.
The substantial improvement in the country’s index according to the NRGI stems from the adoption of the 2018 Fiscal Responsibility Act which introduced concrete
numerical fiscal rules governing public expenditure, preventing unrestrained spending in times of high resource revenues.
Per the 2018 Fiscal Responsibility Act, Ghana’s overall fiscal balance shall not exceed a deficit of 5 percent of GDP – the Fiscal Responsibility Act has however been temporarily suspended to make more funds available to the government to spend and moderate the adverse impact of the Covid pandemic.
“The Fiscal Responsibility Advisory Council was appointed in 2019 as an external body charged with monitoring compliance of the Fiscal Responsibility rules by the government. These steps have pushed the 2021 RGI national budgeting subcomponent score to 70 points, placing this subcomponent in the higher end of the satisfactory performance band,” stated NRGI.
But expressing some reservations on the oil and gas revenue management score assigned to Ghana by the index, Dr Steve Manteaw, Co-Chair of Ghana
Extractive Industries Transparency Initiative (GHEITI), stated that he was surprised at the score especially given the myriad of concerns raised by both the Public Interest Accountability Committee (PIAC) and the GHEITI on issues bordering spending inefficiencies and outright infractions of the Petroleum Revenue Management Act (PRMA).
Citing the instance that the 2019 PIAC report disclosed that the Finance Ministry had for the third time failed to submit report oil expenditure data for the compilation of the Committee’s report.
In terms of value realisation and enabling environment for resource governance, Ghana scored 79 points and 71 points respectively.
On the country’s general resource governance, NRGI in the 2021 RGI, scored the country’s oil and gas sector 78 points out of 100, an improvement of 11 points from 2017’s 67 points.
The country’s strengthened resource governance, the NRGI notes is underpinned by improvements in the governance of licensing and national budgeting along with continued improvements of the state-owned GNPC and the Ghana Stabilization Fund, the country’s sovereign wealth fund.
“The adoption of new laws regarding licensing and national budgeting strengthened Ghana’s extractives legal framework and helped drive the 2021 RGI score increase,” said NRGI.
Adding that although the country’s oil and gas sector improved by 11 points in the 2021 RGI, disclosures around licensing, beneficial ownership of companies, environmental and social impact assessments, as well as asset declaration by public officials remain inadequate.
The Resource Governance Index (RGI) serves as a key point indicator in the extractive sector governance in resource-producing countries around the world. It also serves as a global benchmark, country and sector diagnostic tool, and a roadmap for policy and practice reform.
The 2021 Resource Governance Index assesses how 18 resource-rich countries are managing their oil, gas, and mineral wealth. The composite index has three components. Two measure essential characteristics of the extractive sector, namely value realization and revenue management, and the third analyses the overall governance framework.
