The Finance Minister, Seth Terkper has hinted of another possible review of the budget due to low crude oil prices.
The price of crude has fallen to around $33 per barrel; below the benchmark price in of $53 per barrel in Ghana’s 2016 budget, at which $502.10 million is expected in petroleum receipts.
“We are preparing the scenarios to go to cabinet and pretty soon I believe subject to the decision of cabinet, we would come out with the fiscal position in accordance; there is precedent. If you don’t do that, you raise expectations that Ministries, Departments and Agencies can spend at a price of $53 which does not exist”, the minister said in reaction to the price difference and implications for revenue.
Mr Terkper said that if it should happen, review of the 2016 budget and the benchmark price from $53 to the average of $45 per barrel, would be “tough but lesser of a yeoman’s job” and should not be as difficult as it happened in 2015 when the benchmark oil price was adjusted downwards by over $40, from $99 to $52 per barrel.
Following the precedent in 2015, the Petroleum Revenue Management Act 2011 (PRMA) was amended to allow the minister to use his discretion to set a lower benchmark price than the formula in the act would generate, subject to parliamentary approval.
Seth Terkper said consequently the $53 used in the 2016 budget is lower and would otherwise have been $86 per barrel.
By Emmanuel Odonkor