MP calls for amendment of GIIF Act to allow usage of funds on non-infrastructure projects
A leading member of the Finance Committee of the New Patriotic Party (NPP) in the Sixth Parliament, Dr Mark Assibey-Yeboah, says there is the need to amend the law that established the Ghana Infrastructure Investment Fund (GIIF) to make it possible for the country to apply portions of the funds in areas outside infrastructure development.
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“This will ensure that funds of the GIIF do not lie idle,” the Member of Parliament (MP) for New Juaben South told the GRAPHIC BUSINESS in Accra.
In its current state, the GIIF Act, Act 877 (2014), does not allow the use of money in areas other than infrastructural development.
Dr Assibey-Yeboah, however, believed the fund had monies which were sitting idle and the proposed amendment of the law is, therefore, meant to allow the usage of the money in other areas.
The GIIF was established by the previous government in 2014, in pursuant to the GIIF Act, Act 877 of 2014.
Its mandate is to provide financial resources to manage, coordinate and invest in a diversified portfolio of infrastructure projects in Ghana for national development.
It is estimated that the nation needs an additional US$1.5 billion of infrastructure investment each year for the next decade to satisfy its infrastructural needs.
Under budgetary constraints, the government needed to leverage its resources as best as possible to satisfy its investment needs.
The GIIF was, therefore, instituted to focus on strategic infrastructure that will lead to job creation and the growth of the economy, but Dr Assibey believes there are other critical sectors of the economy that need urgent attention and hence the need to amend the law to allow the use of some of the funds in those areas.
Sources of GIIF funds
The primary source of funds for the GIIF is the 2.5 per cent increase in the Value Added Tax (VAT) rate, the Annual Budget Funding Amount (ABFA), a portion of the petroleum revenue meant for amortisation and infrastructure development and other such funds as Parliament may decide.
Other sources include: escrowed and on-lent funds from prior investments; private or public domestic and foreign funds from multilateral institutions and development banks.
The GIIF is also expected to look to the capital markets, including the Ghana Stock Exchange, pensions and mutual funds, social security and insurance funds for additional sources.
The fund was to, in due course, pursue its own ratings on the domestic and international financial and capital markets in order to attract the trust and confidence of the market.
Govt priorities
Dr Assibey-Yeboah also disclosed that the government’s priority within the first six months to a year would be to stabilise the macroeconomic environment.
“Without doubt, we know the macroeconomic environment is unstable, and when we say it’s unstable, we are talking of high interest rates, a volatile exchange rate and escalating debts,” he stated.
As a result, he said, top on the government’s priority would be to get a hold on the macroeconomic environment.
“Our desire is to make sure that inflation comes down. Our debt stock is growing and we cannot continue to be borrowing. So we have to restructure some of the debts in order to get the fiscal space to operate,” he added.
In the first few days of the government, the MP said, “We will be looking at restricting the debts, reducing inflation and stabilising the exchange rate.”
That, he said, would help restrict the debts by postponing their maturity periods.
The MP also noted that the cost of borrowing, which is interest rate, had also been increasing, something the new administration would take a critical look at.
“Once we get a hold on our borrowing, we can create the needed fiscal space. If we are not changing lots of cedis into US dollars to repay our loans, then the currency will stabilise and inflation will come down,” he said.
Dr Assibey-Yeboah was confident that a steady reduction in interest rates would help pave the way and create the space for the government to start rolling out its ambitious programmes, including the one district, one factory, one village, one dam and the US$1 million per constituency per year interventions.
