Government subsidies cost Ghana GH¢103m

rice.jpgGovernment’s mitigation strategies to lessen the burden of Ghanaians in
the face of rising world fuel and food prices have left the country
with a more than GH¢103 million loss in revenue over the past month
says the Ministry of Finance and Economic Planning (MOFEP).

The
costs were accrued from the removal of import duties on rice, wheat,
yellow corn, and vegetable oil as well as the removal of excise duty
and debt recovery levy on premix oil.

Total revenue loss
resulting from the removal of import tariffs on staple foods is pegged
at GH¢92.47 million while subsidies on petroleum products accounted for
GH¢49.4 million.

Additionally, the subsidies for the supply of
fertiliser are expected to cost about GH¢11 million, aside from other
subsidies that are yet to be quantified in the government’s relief
measures.

The Minister of State at MOFEP, Dr. Anthony Akoto
Osei, who disclosed this in Accra yesterday, said the skyrocketing fuel
prices, which as of yesterday was trading at US$138 per barrel on the
world market, were not anticipated and this has put further stress on
government’s finances for the year.

Oil imports as of the
first quarter of the year amounted to US$526.8 million and are expected
to exceed US$2 billion by the end of the year.

He said
government will have to rely on divestiture receipts to close the
financing gap that will be created by the relief measures announced by
the President.

Top on government’s divestiture list is the
privatisation of Ghana Telecom, which UK-based firm, Vodafone, is
currently negotiating with state officials.

"The enhancement
in divestiture receipts will improve the fiscal position of the budget
and shore-up foreign exchange reserves to reduce the pressure on the
local currency.

"In addition, administrative measures for
revenue mobilisation are being improved to ensure that the revenue
agencies improve on their revenue collection performance," he said.

Also,
the Volta River Authority has been asked to reduce its cargo imports of
crude oil to power the country’s energy generation thermal plants and
depend more on hydropower generation.

"We expect hydro-power
generation to account for about 65 percent of our energy needs while
thermal will account for 35 percent from now on," he added.

Dr.
Akoto-Osei, who sounded bullish on the state of the economy, also
indicated that non-essential expenditure of the MDAs is to be
rationalised to control government’s spending on non-developmental
activities.

Source: BF&T