President John Agyekum Kufuor on Thursday identified persistent under pricing of petroleum products as one of the major problems the economy faces.
He said the persistent under pricing resulted in the Tema Oil Refinery (TOR) accumulating a debt that currently exceeded the primary capital of the entire banking system of the country.
"This poses a systemic risk to the whole banking sector", he said. Delivering his State of the Nation Address to Parliament, President Kufuor said the need to break away from this precarious situation informed the recent near 100 per cent hike in petroleum prices.
He observed that the past year had been full of challenges making the government to start the first quarter of this year with many difficult decisions in its determination to establish a firm foundation to accelerate the economic transformation of the country.
"This is why after the nation talked about malfunctioning of the economy for a long time, agonised about the difficult measures that can fix it for many years, and yet tried to dodge taking the hard decisions for so long, it is now having to bite the bullet in a last ditch stance to free the economy for real growth.
"Hence the petroleum and utility price rationalisation and increased and efficient domestic revenue mobilisation."
President Kufuor said government decided that the debt should not accumulate further and that the debt should be paid within a reasonable period and manner that would not cause problems of affordability to the public.
"Government also decided that the management of TOR should be made to be more efficient and the industry to be progressively opened to private sector participation," he added.
"Other changes associated with the increases in petroleum prices and government reform programme in the sector is the establishment of a new independent institution that will be responsible for fixing maximum allowable prices for petroleum products.
"A market-driven formula has been drawn to guide this institution," President Kufuor said.
The President's observation of the people's perception of the fuel price increase is in the statement: "I am heartened that many Ghanaians have been understanding of the need for these policies and have been willing to put up with the difficulties. I am aware that peoples' willingness to endure the current difficulties is a manifestation of their belief in this government that it will lead the nation out of the difficulties that have beset her for so long."
President Kufuor said what was left was for the government to hold the people's trust to influence their attitudinal change for the better.
"They will then share in the vision of the government and be more willing to endure the sacrifices for the positive change the nation must have."
