Low oil prices don’t hurt Ghana – Kwarteng

Obuasi West Member of Parliament, Kweku Kwarteng, has said assertions that Ghana’s economy is negatively affected by dips in world oil prices are insincere.

He said the country, being a net importer of oil, cannot claim to lose revenue as a result of falls in the price of crude on the world market.

The MP made these observations at an oil and gas forum held in Accra for political parties organised by Penplusbytes, a local non-governmental organisation, Friday February 12, 2016.

He stated that: “The suggestion that when oil prices fall, it hurts our economy is a dishonest one. Ghana is a net importer of petroleum. And what has happened is that whenever petroleum prices fall, the analysis has been what we have been losing from the export side; nobody is telling us what we are gaining from the import side. For a country that imports crude, I think we should drop this suggestion [that a] drop in crude oil prices on the international market hurts our economy.

“We think that going forward, we have to analyse the taxes we put on petroleum to get more money to compensate for what we are losing on our exports...so that the impression is not created that somehow our economy is hurt.”

Revealing the plans of a future New Patriotic Party (NPP) government for financial management of the economy in the face of falling prices of oil on the world market, the legislator said the focus would be to check corruption and reckless spending in government.

“Broadly, we think that oil money is just money. If the broad financial management of the economy is infested with corruption and bad spending, you are never going to have a culture within which people say: ‘Well, when it comes to other monies, we can mismanage it, but for oil money, we have to manage it well.’ So, we think the real answer is cutting the waste and the corruption and improving the general management of the economy, so that oil money can fall into that culture. That is the position an NPP government will pursue,” Mr Kwarteng disclosed.

The NPP’s views were seconded by the People’s National Convention (PNC).

Its youth organiser, Atik Mohammed, said “a fall in crude prices should be no reason for the country to be at a standstill”. He said the plummeting oil prices on the world market, for a country that imports more of the product than it exports, would translate into a reduction in the amount of money the state spends to import petroleum, hence the state would not be left worse off.

The PNC suggested the passage of a fiscal responsibility act to check overspending, including enforcement of a cap on government borrowing, which it said could lead to debt overhang.