The Energybond and Lessons for Governance

In 2015 the government of Ghana through Parliament enacted the energy sector levies Act as a major fiscal innovation  and solution to acute investment gap in the energy sector and as a secured and trusted source of revenue to manage the unsustainable debt situation in the sector with toxic effect on the banking sector. All stakeholders in both banking and energy sectors  were sure final solution was developed to ensure positive outlook for the energy sector and to mitigate  the heightened threat of nonperforming loans. The previous opposition described the levies as insensitive and nuisance with the promise to scrap it. This fear made some CEOs of Commercial Banks in January 2017 to caution government  not to scrap the Energy Sector Levies Act (ESLA). The government insignificantly reduce some components and thereafter embraced ESLA as a fiscal tool to leverage on to borrow. The question is since banks are comfortable with the Existing arrangement with ESLA why collacterlize ESLA revenue flows?
Why collateralize ESLA revenue flows only in the interest of managing non performing loans? ESLA revenues are to partly pay energy sector debts and partly invest in energy infrastructure .Does it mean ESLA will be with us for the next 15years? What should we expect?
We should expect that even if the Energybond is successful all the energy sector debts will not be paid. Because ESLA is only creating a fiscal space to borrow. Also we will create new creditors and increase the debt stock. Since it is the government issuing the Energybond it becomes part of public debt.
What are the lessons?
It means the government considered the ESLA an innovative fiscal package to be utilized and that former managers of the economy were.  forward looking and innovative
Also the use of ESLA to raise about GHC6billion does not reduce the debt stock
That  politicians dont scrap sustainable and proven revenue sources  they rather take advantage of them
Source: Dr John Gatsi

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