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Inside the MP's Toolkit: Approaches to Budget Analysis in Ghana

On 19 November, Ghana’s Minister of Finance tabled before the country’s parliament the government’s 2015 budget and economic policy statement. The budget statement includes economic forecasts, estimated revenues and proposed resource allocation for the upcoming financial year, as well as projections for 2015 petroleum receipts.

After the ceremonial presentation of the budget to the Legislature, parliamentary committees have withdrawn to deliberate on what the minister has proposed, and will submit their reports for debate in plenary and a subsequent approval of the appropriation bill, authorizing the mobilization of revenues and spending by the government in 2015.

The Natural Resource Governance Institute (NRGI), as part of its technical and advisory support to the Parliament of Ghana, is working with two key parliamentary committees—finance, and mines and energy—to help members of parliament (MPs) to scrutinize and discuss critical issues related to the projected petroleum receipts. With generous support from STAR-Ghana, NRGI has developed a revenue management analysis tool to assist parliamentarians in their budget hearings and consultations prior to approval of the budget. The budget scrutiny tool raises significant questions on oil revenue allocations drawing on the presented budget and other reports of government agencies.

Additionally, NRGI is producing a report (“Strengthening Oil Revenue Oversight: The Role of Members of Parliament”), which analyzes issues of revenue management and the oversight role of MPs. A third and final piece being produced for the current budget session is a report (“Forecasting Oil Revenue for the Budget using an Open Fiscal Model”) and open-source model, which dig deeper into oil revenue projections. Together with the analysis tool, these form a suite of resources which MPs can apply in the course of their oversight duties.

One of the issues of public interest following the budget statement is Ghana’s actual and projected oil revenues. Last week, at a STAR-Ghana-supported event, the NRGI team facilitated the finance committee’s discussion on different oil price scenarios. (The proposed budget makes projections based on a price of $99 per barrel—significantly higher than the current Brent crude price.) We explored implications for petroleum revenues and the budget, especially given Ghana’s cap on withdrawals from the stabilization fund, which is the financial buffer—generated from oil revenues—to meet any shortfalls in government projections.

A second STAR-Ghana-supported, NRGI-led discussion with members of the mines and energy committee was particularly animated. While the NRGI revenue management analysis tool does not yet address gas—a nascent sub-sector in Ghana that is only just coming online—MPs raised that it is not too early to begin interrogating issues for revenues that will come from gas projects in 2016 and beyond.

Adams Fusheini is NRGI’s Africa Parliamentary Program Officer.