APPENDIX I Resource Revenue Transparency: The Mining Sector

72. In light of the importance of revenues from the mining sector, which accounts for around 10 percent of GoG revenue, and the commitment of the government to transparency, this appendix provides a review of the current status of the sector’s revenue practices. This review covers relevant aspects of fiscal transparency with regard to management of Ghana’s mining industry assets, and includes a discussion of Ghana’s participation in the Extractive Industries Transparency Initiative (EITI). The review is structured in the same way as the main text of the fiscal transparency ROSCs, but applies only to those elements of the code of relevance to mining revenues.31

Clarity of roles and responsibilities

Legal framework for mineral revenues

73. The legal framework for management of minerals is clearly defined.


The Constitution (Chapter twenty-one), the Minerals and Mining Law, 1986, and its 1994 Amendment Act, and the Minerals Commission Law, 1986, provide the overall legislative framework for the mining sector. The State is the owner of all minerals in their natural state within Ghana’s territory and the Ministry of Mines acting as its agent grants licenses to exercise mineral rights. The Minerals and Mining Law specifies the forms of mineral rights that the ministry can license, the duration of the license, the size of the concessions, and eligibility criteria and procedures for application. The Law also spells out the rights and obligations of a holder of mineral rights. The Minerals Commission has been set up to regulate and manage the utilization of mineral resources and coordinate policies with regard to minerals. Small-scale mining activities in the gold sector are governed by the Small-Scale Gold Mining Law, 1989.

74. The tax policy framework and fiscal regime covering the mining sector are clearly stated and rather comprehensively covered in law.


The fiscal regime for the mining sector is enshrined in the Minerals and Mining Law. The regime includes government rights to equity shares in mining companies (see discussion below). Article 22 requires mining companies to pay no less than 3 percent and, depending upon their profitability rate, up to 12 percent of their gross revenue as royalties. Article 23, as amended in 1994, subjects the mining companies to corporate income taxes—at standard rates. The Law’s article 26 introduces a special regime for capital allowances and the carry forward of financial losses. Article 27 authorizes the mining companies to be exempt from customs duties on plants, machinery, equipment, and accessories imported for mineral operations.32 The legislation also leaves open the option to include “fiscal stability” clauses in agreements with mining companies.33 Mining companies also pay local property taxes on their immovable properties. All tax payments to the GoG are disbursed into the Consolidated Fund, while property taxes are paid to the District Assemblies. There are no explicit legal requirements for mining companies to provide social services to local communities.

75. Rights of companies to retain foreign exchange are covered by the law.


The Minerals and Mining Law, articles 29 and 30, permits mining companies that have earnings denominated in foreign exchange to retain in an external account at least 25 percent of such earnings with a view to meeting offshore obligations. The companies can negotiate higher retention rates with the Minerals Commission based on the nature of the project and the cost structure of the company. However, mining companies with retention levels above 60 percent have agreed to voluntarily repatriate 25 percent of their gross earnings into a foreign exchange account with a chosen Ghanaian commercial bank, bringing the effective retention rates into the 30–55 percent range. The Minerals and Mining Law regulates the conditions under which an external retention account can be operated and the type of payments that can be made from it.34

Extrabudgetary funds

76. The Mineral Development Fund operations are administratively clear but not well integrated in the national and local budgets.


The GoG has set up a Mineral Development Fund that through the Consolidated Fund receives 20 percent of mining companies royalties.35 Half of the Development Fund supports the mining agencies (the Mines and Geological Survey Departments and the Minerals Commission). The rest is transferred to the Office of the Administrator of Stool Lands to be distributed in the mining communities. In accordance with article 267 of the Constitution, the Office of the Administrator of the Stool Lands can retain 10 percent of the payment while the remainder 90 percent is distributed to the local authorities in the following proportions: (i) the stools of the mining areas, 25 percent; (ii) the traditional authorities of the areas, 20 percent; (iii) the District Assemblies within the area of authority of which the stool lands are situated, 55 percent. The local expenditures are aimed at repair of environmental damage and development projects in mining communities. In part reflecting the complicated nature of the arrangement and the disbursement procedure through the Office of the Administrator of the Stool Lands, the legally prescribed payments to the three types of local authorities tend to be paid with a significant delay. Moreover, these local authorities tend to use these payments to finance expenditures other than those that benefit the local mining communities and do not properly account for and report the use of these monies.

Quasi-fiscal activities and social obligations of the mining companies

77. Quasi-fiscal activities and social obligations of mining companies are identified, but not considered as part of the budget process.


The annual reports of the major mining companies provide an overview of the social services provided to the mining communities.36 These typically involve educational and health care services, infrastructure and utilities, and the sponsoring of recreation and sports activities. The Chamber of Mines publishes a report on its members’ environmental and social activities in local communities. However, these elements are not considered as quasi-fiscal activities or implicit taxes in government budgets, and no aggregate quantitative information on social service spending by the mining industry is available. Indications are that in the major extraction sites, mining companies account for a significant share of the social infrastructure and provision of social services. As a result of the tariff structure for electricity consumption, mining companies, on par with other large consumers, also implicitly cross-subsidize small users.

Government equity holdings

78. Government rights to equity holdings in mining companies are covered in the law.


According to article 8 of the Minerals and Mining Law, the GoG is, without a financial contribution, entitled to a 10 percent interest in the rights and obligations of mineral operations that have been licensed and can acquire up to a further 20 percent interest on terms agreed with the mining lease holder. GoG equity holdings in selected mining companies are reported in the CAGD’s annual report and financial statements.37

Public availability of information

Budget documentation of revenues

79. Mining-related revenues are publicly reported and included, but not separately identified, in the budget.


The main source of information on mining-related revenues is the Minerals Commission. The budget documents, notably the budget statement and the annual public accounts, do not identify separately such revenues. The Minerals Commission on a semi-annual basis releases a statistical overview of the mining industry.38 In addition to data on employment, output, and overall receipts, this overview contains information on the industry’s contribution to government revenue—broken down by main revenue category and expressed both in nominal amounts and as a share of total IRS collection—and the payments to stools, traditional councils, and district assemblies of mining areas. The Mineral Development Fund has an obligation to annually report on its activities, but there is no publicly available information on the use of the monies passed on by the Fund to the mining agencies. The Office of the Administrator of Stool Lands reports to Parliament on the monies in the Mineral Development Fund that are transferred to the local authorities. There is no publicly available information on dividends from GoG equity participation in mining companies or on public sector contingent liabilities or tax expenditures associated with the mining industry.

80. To improve the transparency of resource revenue, the authorities have volunteered to participate in the EITI, but further improvement in data reconciliation is required.


The MoFEP and the Minerals Commission have agreed on a suitable format for the host government reporting template, along the lines of the EITI’s May 2003 reporting guidelines, and intend to issue the first transparency report before year-end. The legal framework and contracts between the GoG and mining companies permit full disclosure of payments to the government. However, the current arrangements for the collection of information by the Minerals Commission, the BoG, and MoFEP appear to fall short of what is needed to meet the EITI template standards.39 This reflects both gaps in the data provided by the mining companies, with regard to dividends, bonuses and fees in particular, and some of the more general weaknesses in the CAGD’s accounting and reporting systems. The authorities recognize the need to upgrade the resource revenue data collection and reporting systems.

Open budget preparation, execution, and reporting

Budgeting, fiscal policy, and mineral revenues


81. Most mineral revenues are fully reflected in the budget and accounts, but sustainability issues are not explicitly addressed in the budget. Mining revenues other than the earmarked 20 percent of royalties and the property taxes levied by the District Assemblies go to the central government. They are fully fungible with the other resources in the Consolidated Fund and spent through the standard appropriation process. Including personal income (PAYE) taxes, these mining revenues have accounted for around 10 percent of GoG revenue in recent years. The sector’s contribution to GoG revenue is expected to remain broadly unchanged in the coming years but, given the mature nature of most mining operations in Ghana, to diminish over the medium to long term. There are no policies in place to set aside part of the GoG mining revenues for the benefit of future generations. As indicated in the main text, fiscal risks arising from mineral revenue volatility are not explicitly considered in the budget documents.

Accounting and administration of resource revenues


82. Standard collection and accounting procedures apply to mineral revenue receipts. Mining companies and small-scale miners are subject to the standard arrangements and procedures for the payment of personal income taxes (PAYE), corporate profit taxes, and import duties.40 The IRS is responsible for the assessment, collection and recovery of royalties and the disbursement of all royalties collected into the Consolidated Fund.41 The Large Taxpayers Unit that came into operation on April 1, 2004 covers mining companies that employ 500 or more workers on par with other companies that meet this criterion.

83. The reporting system set up by the Minerals Commission is the main source of information on mining revenue.


The major mining companies report—in addition to information on production, employment, and receipts—data on the contribution to government revenue by main tax and on gross foreign exchange proceeds retained and voluntarily repatriated through local commercial banks. Additional information on tax payments and foreign exchange earnings is collected by the IRS and the BoG. Small-scale miners are not captured by these reporting systems.

Assurances of integrity

Mining company audit

84. Audit of mining companies is consistent with international standards.


The accounts of the major mining companies are audited by international audit companies, comply with international accounting standards and are published on the companies’ websites. These accounts are submitted to the Minerals Commission and the BoG. The small-scale mining companies do not produce accounts.

Government audit

85. General weaknesses in government external audit apply also to mining sector receipts.


The Minerals Commission is required to keep books and accounts in a format approved by the Auditor-General and have them externally audited within three months after the end of each financial year. In practice, the more general weaknesses in the capacity of the external audit office and parliamentary follow-up (see paragraph 56, main report) also affect the Minerals Commission. Moreover, there is no independent verification of the information on foreign exchange earnings, off-shore retention and voluntary repatriation that is reported to the Minerals Commission and the BoG, and concerns have been expressed that this information, and the derived computation of royalties due, may not be fully accurate.

Reconciliation and oversight of company/government flows

86. An aggregating body to oversee company/government reconciliation of data has not yet been set up.


In relation to EITI participation, the authorities are examining the selection of an aggregating body (an independent party responsible for aggregating and ensuring the quality of the reporting templates submitted by the host government and the companies, respectively). Four possible institutions are being considered for this task, and donor funding to finance the activities of the aggregating body has been sought.


Discussions on fiscal transparency were held in Accra during February 16–27, 2004. The staff team, comprising Messrs. De Broeck, Kinoshita, Thomas, and Webber met with officials from the Ministry of Finance and Economic Planning, the Controller and Accountant-General’s Department, the Auditor-General’s Office, the ministries of health, education, roads and highways, private sector development, local government and rural development, and mines, the Minerals Commission, State Enterprises Commission, Divestiture Implementation Committee, and Bank of Ghana as well as representatives from private sector and nongovernmental research institutions.


According to the 2003 provisional outturn, transfers to these three statutory funds accounted for 11.5 percent of total central government expenditure. There are two additional statutory funds: the Petroleum Related Fund, transfers to which represented 0.4 percent of spending in 2003, and the National Health Insurance Fund, which was introduced in the 2004 budget but is not yet operational.


Catriona Purfield, “The Challenge of Fiscal Sustainability in the Post-HIPC era in Ghana,” in IMF Country Report no. 03/134, May 2003, pp. 50–79, provides estimates of such operational losses during 1999–2001.


According to the Foreign Investment Advisory Service study, “Ghana, Administrative Barriers to Invest. Update,” June 2003, Ghana scores high (indicating unsatisfactory performance) for such survey indicators as the unpredictability of laws and complexity of regulations.


The financial year coincides with the calendar year.


Foreign Investment Advisory Service, “Ghana, Administrative Barriers to Invest. Update,” June 2003.


Foreign Investment Advisory Service, “Ghana, Administrative Barriers to Invest. Update,” June 2003.


The budget documents comprise the “Budget Statement and Economic Policy of the Government of Ghana,” the “Appropriation Act,” and “Annual Estimates” for individual ministries. The within-year report to Parliament is entitled “Review of Economic Performance.” Monthly gazetted budget execution reports, titled “Report and Financial Statements on the Consolidated Fund of the Republic of Ghana,” and the annual final accounts, titled “Report and Financial Statements on the Public Accounts of Ghana (Consolidated Fund),” are compiled by CAGD. The printed 2004 budget statement is priced at 70,000 cedis (about US$7½). It is also available on the web at


Specifically, it includes: (i) a review of economic performance and the implementation of budgetary policies for the previous financial year; (ii) an outline of Ghana Poverty Reduction Strategy (GPRS) targets; (iii) major government objectives for the budget; (iv) statements of new revenue or expenditure policies; (v) data on selected macroeconomic indicators, such as the balance of payments and inflation; and (vi) aggregate revenue and expenditure projections by economic classification.


There are 2,650 cost centers. Economic classification distinguishes four items: personal emoluments, administration, services, and investment.


For example from user charges in health and education. However, the government acknowledges some serious under-reporting of the actual levels of these internally generated funds in the budget execution reports.


The FAA requires the CAGD to finalize the public accounts within three months after the end of the financial year, leaving the Auditor-General’s Office with another three months to complete the external audit.


Mostly due to delays in the auditing by the office of the Auditor-General, the most recent publicly available final accounts are for 2000.


The ministry of health, for example, produces quarterly financial statements.


GETF and the Road Fund prepare monthly statements and DACF quarterly ones. These statements are for internal use by the MoFEP, and they are not publicized.


For the 2004 budget, the key targets relate to real GDP growth (5.2 percent), inflation (less than 10 percent), gross foreign exchange reserves as a cover of imports (no less than 3 months), primary budget balance (surplus of 1.7 percent) and overall budget balance (deficit of 1.7 percent).


As at February 2004, the government reported a total of 33 fully state-owned corporations which are under the purview of the State Enterprises Commission and 75 subvented agencies. The expenditures of these organizations (and those of the statutory funds) must be accounted for under their specific regulations, but are not included in the budget or GFS reporting.


As at February 2004, the CAGD reports that approximately 1400 (out of about 3000) such accounts with the BoG have been closed.


See, for example, Commitment Control System Operating Manual, MoFEP, September 2003.


Some spending agencies, for example the ministry of health, consolidate the monthly accounting information into quarterly reports which are then distributed to MoFEP, donors, and other interested parties.


Revenue Agencies (Retention of Part of Revenue) Act, 2002.


There is no legislative requirement for mid-year budget reporting, but the MoFEP’s “Review of Economic Performance” statement—which in 2003 accompanied a request for supplementary appropriations—reviews fiscal performance and the mid-year budget outturn data. These reports were submitted to Parliament in November in both 2002 and 2003.


During the period 2000–03, the simple average deviation between the budget allocation and actual expenditure for the largest spending ministries of education, health and the interior was estimated at 27.3 percent, 30.2 percent and 26.4 percent, respectively.


FAA 2003 (Article 38 (1)).


For instance, the November 2003 monthly report and financial statements on the consolidated fund did not state the basis of accounting used in its preparation.


Salary expenditures for ministries, departments and some subvented agencies are paid directly by CAGD.


Internally generated funds are a significant source of funding for some ministries and subvented agencies. For example, they comprised around 16 percent of revenue for the ministry of health in the 3rd quarter of 2003. The education sector also raises a significant amount through the collection of school fees. District Assemblies are thought to generate an estimated 1.5 percent of total government revenue through internally generated funds.


GAS is a member of the International Organization of Supreme Audit Institutions and applies audit standards based on internationally recognized standards.


Key audits in arrears are as follows: (i) public accounts for the Consolidated Fund: 2001, 2002; (ii) MDA accounts: 2001, 2002; (iii) special reports on the HIPC fund and GETF; (iv) District Assemblies: 1997 onwards; (v) report on public boards, corporations and other public institutions: 2001, 2002; and (vi) foreign exchange receipts: 2001, 2002.


For an overview of the mining sector in Ghana, see Bank of Ghana, “Report on the Mining Sector,” Research Department Sector Study, Vol. 1. No.2, November 2003.


However, with the coming into effect of the 2001 budget, plants, machinery and equipment have been subject to a 1 percent processing fee and all other imported items to a 5 percent import levy. The various exceptional exemptions could be considered as tax expenditures, in which case they should be reported in the budget documents. An alternative, and more practicable treatment, is to consider the totality of such arrangements as being the baseline tax regime for the mining industry. The main transparency obligation under these circumstances is that the regime be clearly explained and subject to periodic review as part of the budget process.


For instance, in the context of the 2003 merger of the Ashanti Goldfields Company with AngloGold, the GoG undertook for the next 15 years not to take any actions that would impose additional tax obligations on the merged company. In particular, royalty payments and the corporate tax are fixed at 3 and 15 percent, respectively, for the next 15 years.


The BoG and the Minerals Commission both monitor the foreign exchange outflows and inflows—including the repatriation of retained export proceeds into domestic commercial banks and the partial settlement of bills with local contractors in foreign currency—of the mining companies, but the collected information is not made publicly available.


The Fund was created in 1993 by an administrative decision and does not have a basis in a legislative instrument.


The annual reports of the two largest mining companies can be found at their websites, and, respectively.


For instance, until the company’s recent merger, the GoG owned 17 percent of the ordinary shares in Ashanti Goldfields Company and one preference share (“Golden share”). The Company made no dividend payments during 2001–03.


This information is made available at the Minerals Commission’s website,


The EITI guidelines can be found at


Standard procedures apply. However, some mining companies have requested the IRS to be allowed to settle their tax obligations in US dollar, the currency in which their accounts are denominated.


While major mining companies meet their tax obligations on a timely basis, most small-scale miners continue to operate in the grey economy and do not pay any taxes.

Ghana: Report on the Observance of Standards and Codes—Fiscal Transparency Module
Author: International Monetary Fund