6 per cent of fuel subsidy needed to expand LEAP

That would cover about a third of all households living in extreme poverty in the country.

The calculations were made by a Deputy Director of the Department of Social Welfare, Mr Lawrence Ofori Addo, to advance the position of targeted social intervention programmes as a measure in mitigating the economic effects of the removal of fuel subsidies on the poor.

He advanced the position at a media seminar on, 'Communicating the use of fuel subsidy for social protection interventions — The role of the media.'

It was organised by the Africa Business Media and the Institute of Financial and Economic Journalists (IFEJ) for journalists in Accra.

Mr Addo said studies by the World Bank showed that the removal of fuel subsidies was a real income loss for the poorest households, which are those at the lowest quintile of about 7 per cent, which was GH¢140 yearly.

Mr Addo strongly advocated LEAP as a well-structured and targeted social intervention programme that could become one of the targeted measures in ensuring that the vulnerable would not be made worse off with the removal of subsidies.

The acting Head of Research at the Bank of Ghana, Mrs Grace E. Akrofi, said government needed to withdraw fuel subsidies to enable it save enough resources for critical sectors of the economy.

She said the bank was particularly worried that the government, in most cases, failed to stick to its budget on subsidies, especially in instances where global fuel prices rose above the anticipated point.

'When that happens, it destabilises the macroeconomic environment and that creates concerns about the competitiveness of the country for investments,' She said.

By Caroline Boateng & Maxwell Adombila Akalaare