Economists urge prudent expenditure as oil price dips



Business News of Sunday, 20 December 2015

Source: citifmonline

Seth Terkpe Cash ManFinance Minister Seth Terkper

Analysts have impressed on government to be prudent in its expenditure in order to benefit from the global declining crude oil prices.

The price of Brent crude declined to a record low of below 40 dollars last week.

This is because the Organization of the Petroleum Exporting Countries (OPEC) decided not to cut oil output despite excess supply.

The 2016 budget statement quoted an estimated crude oil price of 53.05 dollars per barrel with anticipated revenues from the petroleum sector pegged at GHc2,008.4 million.

This figure, some industry watchers predict, government may be forced to revise if the development persists.

An economist, Dr. Samuel Nii-Noi Ashong told Citi Business News, rationalizing expenditure will reduce the impact on Ghana, which is a net importer of oil.

“We are a net importer of oil, so the oil prices declining is good for us in terms of oil imports to fuel the thermal plants and all others,but in terms of revenues accruing to the budget, it will be smaller. But on the other hand, we are going to have some respite in the supply of oil and other petroleum products for consumers,” he said.

Dr. Nii-Noi Ashong added, “If the prices come down below the 53 dollars target, that will affect government’s revenue which mean either the government cuts down on expenditure or a deficit will be created which will have to be financed from other sources.”

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