Ghanaians must brace themselves for a possible hike in the prices of petroleum products after the International Monetary Fund, last Friday, issued a subtle reminder to Mills-Mahama National Democratic Congress administration to make good its promise of removing petroleum subsidies.
This reminder came after the IMF approved for disbursement to Ghana, some $179 million under its extended credit facility program. It is recalled that in May this year President John Evans Atta-Mills agreed to a pact with the International Monetary Fund to increase fuel prices as he was confronted with the reality of an ailing economy he has presided over in the last 3� years in office.
Deputy Director of the IMF, Nao-yuki Shino-hara, in reminding government of its promise said: �The reemergence of energy subsidies have created the need for corrective actions to achieve fiscal targets�, with these subsidies posing as a risk to macro-economic stability.
He also warned that the rapid depreciation of the cedi, which is fuelling inflation in its wake, and the dwindling international foreign reserves, which �has fallen below comfortable levels�, could have catastrophic consequences for the Ghanaian economy.
In May this year, an IMF mission to Ghana, led by Christina Daseking, revealed that government now paid GH�60 million in fuel subsidies every month, implying a whopping GH�720 million fuel subsidies every year, with oil revenues as contained in government statements amounting to a little over $400 million a year.
She, therefore, asked President �to be swift in arresting the situation.�
It is recalled that President Mills and his administration consented to the removal of fuel subsidies for the IMF to give its approval for the $3 billion loan from the China Development Bank.
The IMF chief reminded President Mills of that pledge, noting that the price of oil imports had risen a lot, primarily because the Tema Oil Refinery is not undertaking its primary objective of refining crude oil, whilst the domestic price of petroleum products has not seen any corresponding increase.
�This is now creating cost. Certainly, we want more people to support social programmes. The cost of living has increased because of the depreciation. Most people know the subsidies on fuel benefit the higher income groups and we�ll encourage you to take necessary [action]�, she further noted.
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