Business News of Thursday, 22 January 2015
Source: The Republic
The Finance and Economic Planning Minister, Seth Terkper in what has been described as a pragmatic move, has set in motion plans to counter the potential threats posed to Ghana’s revenue by the rapidly declining world market prices of Crude oil.
Mr. Terkper is soon billed to present to the Ghanaian Parliament proposals for the review of the 2015 budget with considerations for the new crude oil prices that threatens to disorganize government’s plans for this year. “The required adjustments will be done through the necessary procedures to ensure that the continuous fall in the crude oil price does not derail our fiscal consolidation objectives,” he
Ghana is extremely dependent on crude oil price movement as it derives a substantial amount of revenues from its oil fields at the Offshore Jubilee fields, also, crude oil forms a major part of the considerations that go into the national budget formulation, however, the current price movements on the world market has derailed all the planning that went into the 2015, the Republic Newspaper can report.
At the time the 2015 budget statement was prepared mid 2014, crude oil was selling at over US$99 and considerations of this price went into government’s revenue and expenditure projections, but between September 2014 and January 2015, the price has dropped by almost 50%.
“ The crude oil price per barrel used was US$99.376. As at Thursday, l5’h January 2015, Brent crude price had fallen by more than 50 percent to US$48.80 per barrel,” Finance Minister Terkper noted during a press briefing in Accra earlier this week.
“With the continuous decline in crude oil prices since September 2014, the estimated Petroleum Benchmark Revenue price of US$99.376 per barrel for 2015 may not be achieved and this can have negative implications for the Budget execution,” he warned.
The Finance Minister has consequently started revising economic considerations and taking measures that would cushion the effects of this derailment from the oil prices, including what he described to the Republic Newspaper as realistic revenue and expenditure projection in sync with the global market development.
He assured that as much as it would take extreme task in balancing the disruption caused by the development in crude oil prices, planned development project would not necessarily be affected negatively.
According to Mr. Terkper, the assumptions which underlie the projected growth rate 3.9 percent for 2015 have not changed, adding that this seemingly slow growth is a result of the frantic effort of the John Dramani Mahama’s administration’s resolve for an effective fiscal consolidation- which is expected to peak in 2015.
By the dawn of this peak, as the government would have tamed expenditures; improved revenue mobilization, and implemented important measures that would lead to a drastic improvement in the economic situation in Ghana.
Currently, the government is in negotiations with the International Monetary Fund (IMF) for support to improve economic conditions from 2015.
A major part of this support would be dependent on how well the government cleans the payroll system which has generated serious controversies in the country recently.
The opposition New Patriotic Party (NPP) and civil society groups such as IMANI Ghana and Occupy Ghana allegedly being sponsored by the opposition NPP have dug into the loopholes in the payroll system and have seriously launched a campaign of criticism against the government.
These groups have suggested that a certain clique of individuals in government are using the payroll system to fleece the country of huge sums of money, but the Finance Minister debunked this saying the situation has been blown way out of proportion.
According to Mr. Terkper, the payroll system has been on a systematic cleaning mode.
For instance, the government is providing unique codes to every public sector worker that will be used to pay salaries, the finance minister said.
Explaining further, Mr. Seth Terkper, stated that the codes will enable government workers to access their payslips online as part of moves to eliminate phantom names currently in the system.
“Before the wages are paid, we’ll provide electronic information to the unit level for validation,” He said.
He explained the project is being piloted at some public institution and has been successful so far.