[ 2014-09-28 ]

Fuel Prices Could Go Up Soon
The International Monetary Fund (IMF) has asked
government to strongly consider scrapping
subsidies on energy and petroleum products in
order to contain the country's ballooning budget
deficit.

The recommendation proffered after an IMF team led
by Joël Toujas-Bernaté concluded its preliminary
discussions with government on a possible
intervention by the Bretton-Wood institution,
could lead to an increase in energy and fuel
prices.

Already, Senyo Hossi, CEO of the Ghana Chamber of
Bulk Oil Distributors- the lobbyist arm of bulk
oil dealers- has asked Ghanaians to brace
themselves for the fallout of an IMF programme
that will eliminate subsidies on fuel products.

Since the year began, prices of petroleum products
have been adjusted upwards by four times, which
sums up to about 40 percent as a result of the
slide in the currency, which has fuelled
inflationary pressures.

However, the IMF has observed that due to the
untargeted nature of the subsidies, it will be
prudent for government to do away with the
subsidies through what it called a “front-loaded
fiscal consolidation.”

Mr. Toujas-Bernaté said: “A more ambitious and
front-loaded fiscal consolidation is needed to
help place public debt on a sustainable path, and
to allow monetary policy to be more effective in
bringing down inflation, including by strictly
limiting budget deficit financing by the Bank of
Ghana.

“Front-loaded adjustment should be realized
through reductions in Ghana’s comparatively high
public sector wage costs, the elimination of
costly and untargeted subsidies for energy and
petroleum products, and a better prioritization of
capital spending.”

Ghana’s government reintroduced fuel subsidies
in April this year, without announcing the action,
and since then spent several hundreds of dollars
in extra payments.

Ghana, which is a major exporter of oil, gold and
cocoa is now struggling with a persistent budget
deficit and rising public debt.

According to the Bank of Ghana, as at the second
week of September this year, government’s total
revenue and grants was GH¢13.3 billion as against
its expenditure of GH¢19.3 billion.

At the same time, total public sector debt was
55.4 percent of GDP.

Mr. Toujas-Bernaté said there will be further
talks on a possible program that could be
supported by the IMF will continue at the annual
general meetings of the World Bank and IMF in
Washington DC in October.

Source - B&FT

... go Back