The Institute of Fiscal Studies (IFS) has served notice it is going to seek legal action to compel Finance Minister, Seth Terkper, to admit to allegedly causing financial loss to the state over his failure to hedge Ghana’s crude oil.
Speaking on the Ultimate Breakfast with Prince Minkah, the Executive Director of IFS, Professor Newman Kusi said “the honourable thing for him [Terkper] to do is to resign; when he resigns at least the position will be left vacant and maybe we will get somebody who would ensure this does not repeat itself.”
Last month, two think-tanks – the IFS and IMANI-Ghana – at a joint press-conference, accused the Finance Minister of causing financial loss of Ghc2.7 billion (equivalent to 1.7 per cent of GDP) to the state by his failure to hedge oil prices on the international market.
Hedging is a risk management strategy used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities.
In effect, hedging is a transfer of risk without buying insurance policies.
The Government earlier estimated to rake in Ghc4.2 billion from the oil sector this year, but the sharp fall in crude prices means just Ghc1.5 billion would be raised in 2015.
But reacting to the allegations of IFS and Imani Ghana, the Finance Ministry in a statement described the claims as misleading, arguing that the oil market is a volatile and unpredictable one.
Meanwhile, the IFS Executive Director added that “they are just giving the Minister the opportunity to come out and give an explanation as to why that thing (the hedging) did not happen. If that explanation is convincing enough…fine. If he doesn’t and continues to brush aside what we are saying, we will see what next line of action we will take.
“We cannot give the Minister an ultimatum, we need to respect him, and he’s got a lot of work to do. There are a lot options, if it comes to that (going to court) we will consider it”.