Government's revenue woes to worsen as crude oil hits a 6 year record low
The current challenges facing government when it comes to declining revenue from commodity exports could worsen in the coming weeks.
Crude oi,l one of the country’s new exports is currently trading at around 40 dollars a barrel. This is the lowest in six years.
But as Joy Business’ George Wiafe reports, the development could have serious implications on the economy and companies operating in the oil sector.
Some Industry players are attributing the record decline sudden hike in crude oil supplies on the international market as against little demand, a situation that has been compounded by recent lifting of sanctions on IRAN, by the US to allow that country join global crude exports.
But here in Ghana, the development will throw government’s revenue projection out of gear.
Already the finance minister has revised downwards its revenue from crude oil exports by almost 60 percent to 1.8 billion Ghana cedis based on an oil price of 57 dollars a barrel.
However with crude oil prices, now selling at around 40 dollars a barrel, and with projections that it could go down further, according to institutions like the World Bank, the 1.8 billion Ghana cedis might not be realized.
A development that could seriously affect, major infrastructure projects outlined in the budget that government is hoping to use the oil cash to fund.
The situation could force government to increase taxes to make up for this decline in revenue or cut down its expenditure, a development that is unlikely.
Last year, Tullow Oil for instance, recorded about a 2 billion dollar loss due to declining global prices of crude oil .
This resulted in company carrying out some restricting which resulted in some of its workers being asked go home.
But for consumers of petroleum products, the current happenings might be an answer to their prayers at could lead to prices at pumps declining if the Ghana cedi should stabilize or appreciate.