According to him this has become necessary due to the steady decline in prices of crude oil on the international market, which currently stands at USD 38, the lowest price in oil price for the past eleven years.

20151216_104342Speaking at a technical roundtable discussion held in Accra on the theme: Impact of Falling Oil Prices on Government Revenue and the 2016 National Budget, the Chairman of PIAC noted that the distortions of actual forecast of revenue turns to give better picture of the need to regulate expenditure and project prudent measures of revenue money .

“In a world where there are many financial uncertainties andin the midst of provisions of many infrastructure for the wellbeing of the people, this unfair pressures on the government to fulfilled its mandate calls on the government to be mindful of many projects in the eyes of the fallen prices of commodities (Oil and Gas)” he said.
Prof Buah-Bassuah further questioned whether the government can minimize the country’s exposure to volatility and at the same time restructure the economy towards a sustained and inclusive growth, and stressed that these are areas that needs to be examined so as for the country not to plunged into problem waters again.

He is of the view that the declining price of crude oil from USD 59 to USD 42 per barrel from September 2015 and subsequent revision of bench mark revenue to USD 57 should be of great concern to the government hence the need to deal with the problem scientifically.

“The citizen expectations are is to see the improvement in the economy. The fallen price of commodities requires serious focus and cut down on expenditure as stated by the Finance Minister. With actual discipline in spending and proper management of our revenue in the face of transparency and accountability, the system will adjust and find it right footing” he added.

Production from Ghana’s oil and natural gas fields in the Gulf of Guinea has steadily been increasing since 2010, reaching 102,033 barrels of oil per day in 2015. The petroleum revenues from these productions have become a major source of finance to the government, contributing GHC 666.2 million in 2011, GHC 979.3 million in 2012 and GHC 1.645 billion in 2013 to the state.

As a result of this any changes to this petroleum revenue such as oil price volatility, lack of development/discovery of new reserves and fall or rise in the productions affects the government’s revenue projections. This was evident in 2015 where due to falling oil prices, the government’s estimated Benchmark Revenue for the year was revised down from GHC4.2 billion to GHC 1.7 billion and domestic revenue projected to be GHC 27.1 billion, resulting in a shortfall of GHC 3.1 billion.

This is expected to repeat itself in 2016 hence the Public Interest and Accountability Committee (PIAC) technical roundtable discussions brainstorming on the effects of falling oil prices on Ghana’s domestic revenue vis-à-vis the national budget.

The meeting which was attended by relevant stakeholders in the Oil and Gas sector of the Ghanaian economy including Petroleum Commission, Ghana Revenue Authority (GRA), Institute of Economic Affairs (IEA), Civil Society Platform on Oil and Gas and African Centre for Energy Policy (ACEP) also assessed the impact of the oil price volatility on petroleum revenue and measures that will address the shortfall in Government’s domestic revenue as a result.

Source: Nana Appiah & Seibik Bugri

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