Government’s target of making substantial revenue from gold and oil could face a major obstacle as prices of the commodities plunge on the world market, showing no recovery in the medium term.
The government of Ghana in the 2016 budget projected a little over 2 billion cedis from oil revenue at a price above the current world price.
As at December 11, 2015, a barrel of crude oil was selling for 38 US dollars, with some analysts predicting gold may also see a major decline in price as investors resort to bonds and dollar assets.
More alarming, the price of West Texas crude was reported to have sank to 37.65 dollars a barrel, representing a drop of 5.8 percent, while Brent Crude decreased by 5.3 percent to 40.73 a barrel.
Finance Minister, Mr. Seth Terkper during the presentation of the 2016 budget on the floor of parliament was upbeat about Ghana’s fortune, particularly from the TEN field, but the IMF is warning that 2016 may see a huge drop in the proceeds from the commodities.
In 2015, government made major adjustments to projected revenues from oil and gold; and it appears the trend will continue with the Finance Minister visiting parliament for a review soon.
By this, some sectors of the economy may undergo pruning to allow pressing areas benefit from the scarce resources.
Already, some government agencies and ministries have seen major cuts in budget allocation as a measure of debt stabilization.
Per government’s calculation, the country is seeking to realize about 38 billion cedis next year for infrastructural development.
With this, government expects to get 2billion cedis from the proceeds of oil exports.
The exchange rate regime is one other area that may be hard hit since the Central Bank requires enough reserve to shore up falls in the value of the cedi, relative to other major trading currencies.
In all these, Ghana could however benefit from the imports of crude oil as the price drops.
