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Business & Finance | Feb 4, 2005

IMF has a gun to Ghana's head -Chronicle

Chronicle
IMF has a gun to Ghana's  head  -Chronicle
Laying foundation for a strong Ghana JAK confirms fuel price hike a necessary sacrifice which has to be made The President John Agyekum Kufuor yesterday gave firm indications of higher fuel cost and defended the need for the deregulation of the petroleum sector, which he admitted would cause some anxieties or what he described as 'shock to the system'. “In the short term, it is likely to result in a rise in inflation,” he said in his first State of the Nation address of his second term delivered to Parliament in Accra. ”However, several studies have been made and we believe that with goodwill and sound management, whatever problems will be encountered within the short term will be surmounted and that the economy will be healthier for this policy,” President Kufuor said. Stating the positive effects of deregulation, President Kufuor said it would free government budgetary resources and allow a cut down on borrowing and increase allocations to vital social services. It would also allow the private sector to assume the role of a service provider within a well-regulated environment. “Mr Speaker, this year Government will take a decision on the deregulation of the petroleum sector,” President Kufuor said without indicating how soon that will be. Independently, Chronicle gathers that the International Monetary Fund has got a gun to the head of the Finance and Energy Ministry to implement the planned deregulation before the end of February. “The continued handling by Government of the sector makes it difficult to respond appropriately to market forces when necessary.” President Kufuor noted that at the moment, the unrealistic pricing made petroleum products in the country the cheapest within the immediate neighbourhood and prone to smuggling, adding, “the general laws of economic reality apply to Ghana and we cannot continue to pretend otherwise.” Indeed in Bawku, Chronicle investigations have shown that fuel is now selling at c28,000.00 instead of c20,000.00 because of the shortages that emerge through smuggling of the commodity to neighbouring Burkina Fasso. The Member of Parliament for KEEA and relieved Minister for Energy Dr. Paa Kwasi Nduom within the week said the framework for the deregulation policy was not yet complete, and indicated that a team set to draft the legislation had just finished its work and await parliamentary approval, a development which was said to have taken place eaelier. The former Minister also spoke to Joy FM which also interviewed the previous energy Minister Hon Kan Dapaah in which they discussed issues concerning energy deregulation and its implications. Aware of the political implications they both stopped short of directly pronouncing the inevitable – that because of the world oil prices, there was no way Government could subsidise petroleum prices. Dr. Nduom was quick to add that Government would go the extra mile in protecting the poor and vulnerable who use kerosene and premix fuel, adding that city dwellers should be mindful of the type of vehicle they use as it has financial implications. The goodwill of Ghanaians and understanding of the situation is likely to hold out in the face of possible political exploitation of the increases that are definite to come on by end of this month.


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