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Investment Objectives

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Objectives of the GPFs

Investment Objectives of the Ghana Petroleum Funds

Ghana’s petroleum revenue is first held in a transitory Petroleum Holding Fund (PHF) account before onward distribution to the Ghana Petroleum Funds (GPFs). To ensure intra and inter-generational sustainability of depletable resources, in the case of Ghana, the petroleum funds have been split into two funds: The Ghana Heritage Fund (GHF) and Ghana Stabilisation Fund (GSF). These two funds, collectively known as the Ghana Petroleum Funds receives from the Petroleum Holding Fund (PHF), petroleum revenue in excess of the Annual Budget Funding Amount (ABFA).

The objective of the Ghana Stabilisation Fund is to cushion the impact on or sustain public expenditure capacity during periods of unanticipated petroleum revenue shortfalls. The objective of the Ghana Heritage Fund is to provide an endowment to support development for future generations when petroleum reserves have been depleted. The GSF and GHF have important differences in their investment objectives. GSF is a fiscal stabilization fund, has a short investment horizon with highly liquid investments to be able to meet unanticipated withdrawals. GHF is a savings fund to create wealth for future Ghanaian generations, a long investment horizon, with the ability to take more risk and benefit from illiquidity premium.

To meet these objectives, the guidelines for the management of the Funds are designed to:

  • a. Ensure that the GPFs are managed to achieve competitive investment returns in line with the risk profile derived from the Qualifying Instrument the Petroleum Revenue Management Act (2015), Act 893 as amended.
  • b. Ensure that the GPFs are managed in a manner that balances risks with the goals of sustaining public expenditure capacity and providing an endowment for future development.
  • c. Ensure that the GPFs are managed in accordance with generally accepted sound asset management principles as outlined in the Santiago Principles.
  • d. Ensure that the management of the GPFs is consistent with the highest standards of accountability, transparency and reporting as set out in the PRMA.

Investment Objectives of the Ghana Stabilisation Fund

The objectives governing the management of the Ghana Stabilisation Fund shall be:

  • a. Safety: To maintain assets of high credit quality with negligible default risk while receiving a specified rate of return as will be determined from time to time.
  • b. Liquidity:To ensure that the portfolio of the Ghana Stabilisation Fund holds ample liquid instruments to meet immediate fiscal needs in the event of unanticipated petroleum revenue shortfalls.
  • c. Capital Preservation: To safeguard the capital of the Ghana Stabilisation Fund.

Investment Objectives of the Ghana Heritage Fund

The objectives governing the management of the Ghana Heritage Fund shall be:

  • a. Safety: To maintain assets of high credit quality with negligible default risk while receiving a specified rate of return as will be determined from time to time.
  • b. Capital Preservation: To ensure that the capital of the Ghana Heritage Fund is preserved.
  • c. Diversification: To invest in a mix of negatively correlated asset classes in proportions that reduce risk and maximises the real rate of return over the medium to long term.