Oil Price Collapse May Force Ghana To Revise 2016 Budget
Ghana may have to revise its 2016 budget after the collapse in oil prices, Finance Minister Seth Terkper told a news conference on Tuesday, giving no specific figures.
Oil is one of Ghana’s major exports, along with cocoa and gold, and it produces about 100,000 barrels a day. Prices have tumbled in the past 18 months to below $30 a barrel from as high as $115, and Terkper said the government had based the budget on a projected average figure of $53 per barrel for Brent crude. Brent oil traded at $33.53 a barrel on Monday.
Ghana had one of Africa’s strongest economies until the fall in commodity prices hit revenue and the country is also facing a fiscal crisis that it is trying to solve with the help of a three-year International Monetary Fund aid programme.
Ghana is targeting 5.4 percent gross domestic product growth in 2016, up from 4.1 percent last year, and will aim to reduce inflation to 10 percent from 17.7 percent in 2015, Terkper said.
Provisional figures showed the fiscal deficit at 7.0 percent at the end of 2015, lower than an initial target of 7.3 percent, he told journalists at the news conference.
“We can see that the (fiscal) consolidation is bearing fruit and it’s important when we see the deficit going down.”
President John Mahama faces a tight re-election battle in November in which economic performance will be a big issue. Terkper said the government will resist pressure to raise wages or overspend as has happened ahead of previous votes.
“We are doing a turnaround but we shouldn’t be complacent because there are still some risks, particularly in an election year,” he said.
Terkper said he is optimistic about mid-term growth prospects, forecasting non-oil GDP growth of 8.5 percent by 2018 and overall GDP growth at 9.3 percent that year as new oil and gas comes on stream.