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02.12.2010 PPP

Don't Collateralise Oil Find For Credit — Nduom

02.12.2010 LISTEN
By Daily Graphic

The former flagb earer of the Convention People’s Party, Dr Papa Kwesi Nduom, has said he disagrees with the view that Ghana’s oil revenue should be collateralised. He has, however, expressed support for the setting up of a heritage fund.

Dr Nduom further proposed that 20 per cent of the oil revenue should be deposited in the heritage fund to provide a safety net for the future of the economy and the people of this country.

“I agree totally with the idea; the concept of a heritage fund. I think it’s brilliant. I would even go up to 20 per cent,” he added, while stressing the need for an independent body to manage the fund to ensure responsible governance.


Vice President John Dramani Mahama heightened the debate on the idea during a recent conference of the National Democratic Congress’s students wing - Tertiary Education Institutions Network (TEIN) at Winneba, where he called for an amendment of the Petroleum Bill to allow the government to collateralise anticipated oil revenue for loans.

But Dr Nduom said yesterday on an Accra-based FM station that it was important for the Mills-led government to hasten slowly in its quest to use the oil revenue for development projects.

Dr Nduom said he appreciated the fact that the present administration was eager to use the oil revenue as collateral to acquire loans from abroad to propel the economy as well as to use the oil revenue as budget support for what he calls ‘unspecified’ expenses on the economy.

He explained, however, that “we must look at the oil revenue…as special extra money that we are going to get which we must be careful to use by investing this oil revenue in certain specific areas that will help us industrialise the country, help us bring about a petrol-chemical industry, help us strengthen key infrastructure in the country.”


Dr Nduom urged the government to learn from Ghana’s economic management in the past which was dotted with numerous bad experiences of loans that had left the country with high liabilities, and added that the country’s management of other natural resources had been abysmal and should, therefore, be a lesson in managing the oil revenue.

For the former CPP flag bearer, it was a bad thing to collateralise Ghana’s oil revenue since the failure of the intended objective may hurt the economy and the millions of Ghanaians when such mortgages go wrong.

He said when things go wrong with collateralisation in a private enterprise, only a few people were affected. However, in the case of a country, the entire economy could collapse.

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