World Bank Forecasts 50 Percent Increase in Country's Revenue

Ghana for now may be grappling with fiscal and balance of payments deficits , but these are expected to be short-lived as the country is on the threshold of reaping an estimated 50% increase in revenue from oil from 2011, the World Bank has predicted.

Mr. Ishac Diwan, Country Director of World Bank, Ghana Office is anticipating a striking improvement afterwards from oil proceeds, a recent Reuters' report which has not been contradicted revealed.

"Ghana today to me feels like Korea in 1970, which means next 10 years are a real opportunity," he observed, adding, "this country is taking off in front of our eyes".

When Ghana won independence from Britain in 1957, its economy was on an even kiln with South Korea. However, after decades of political instability and mismanagement, Ghana's per capita GDP is around $800 compared to almost $20,000 for the Asian country, the report noted.

Finance Minister-designate, Dr. Kwabena Duffour and his team are rummaging their economic and finance notes as to how to fill a 13.4% budget deficit, equivalent to 1.34 billion Ghana cedis (US$1.1 billlion), a figure which the World Bank describes as "high and unsustainable " in a report it dispatched to then President-elect Atta- Mills.

Meanwhile, the Executive Director of the Integrated Social Development Center(ISODEC), Mr. Bishop Akolgo, has urged the Atta-Mills administration to consider reviewing the oil regulatory framework and the master plan to determine whether they are in the best interest of Ghana. He has also advised the government to prudently manage public expectations of the oil revenue if it is not to disappoint those who are expecting 'manner to fall from heaven' too soon.

According to him, he had heard members of the past NPP government and the present NDC administration commenting on the oil as if the revenue will start flowing tomorrow. He has thus advised the current government to avoid forecasting oil revenue into its budgets.Instead, Mr. AKolgo is urging the government to insulate the economy from over reliance on oil revenue and through that avoid future effects of a downturn in the sector. He says Ghana should draw lessons from Norway, which initially failed to insulate its economy from oil and learnt bitter lessons. He accordingly suggests the need for three separate entities of accountability, regulation and funds and asset management to be created.

Ghana's longest serving Finance Minister, Dr.Kwesi Botchwey of the (P)NDC regimes, has also expressed concerns similar to those of Mr. Akolgo. He observes that some people are behaving as if the oil find is a huge bonanza that would solve all of the country's problems. He said, "there have been new findings and therefore, the numbers should be revisited." "This", he warned "is not a huge bonanza, in any case production is not going to start until 2010 and the reserves may be depleted by 2030."According to him, "the estimates we have on a cumulative basis will be about $20 billion, about a billion dollars per year, which is 10 percent of the budget, and it is insignificant. It is not going to solve our problems; it might even aggravate our problems." The oil find, he said could be the reason for the intense political jostling the country experienced during the 2008 elections.Meanwhile, a group calling itself Alliance for Accountable Governance (AFAG), has dismissed as anti-poor the World Bank's advice to the NDC administration to de-emphasize pro-poor public expenditure as measure to fix the fiscal and balance of payments deficits. "Indeed the NDC government has a duty to add to existing social interventions and development projects, not to withdraw any of them; to increase the real wages of workers, not to reduce or keep them as they are," Godfred Yeboah Dame, a member of AFAG told the media.Kwaku Kwarteng, government's spokesperson on Finance in the NPP administration and a member of AFAG, says the deficit figures are not a legitimate base for what the World Bank is asking Ghanaians to do, especially considering the gross reserves of $2.5 billion the past government left.

A visit to the World Bank's offices for their reaction to the issues proved fruitless as Public Agenda was informed that Mr. Diwan was out of the country. Meanwhile, a source close to the World Bank hinted this reporter that the Bank will only comment on the economy again after Ghana's transitional economic team has finished with its work and made its findings known to Ghanaians.