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Ghana slashes 2015 oil revenue forecast on lower prices

By Kwasi Kpodo in Accra
Posted on Friday, 13 March 2015 05:01

Updating Ghana’s parliament on the impact the slump in world oil prices was having on the economy, Finance Minister Seth Terkper also said the 2015 budget deficit forecast had risen to 7.5 percent of gross domestic product (GDP) from 6.5 percent.

This is because the production costs for some of the companies will outstrip their revenues and result in losses

Total revenue and grants were now expected to decline to 29.7 billion cedis from 32.4 billion originally projected.

Ghana, which also exports cocoa and gold, enjoyed several years of robust economic growth after it began pumping oil from its offshore Jubilee field in late 2010.

But it was soon grappling with high deficits, widening public debt and high inflation.

Last month, Ghana reached an agreement with the International Monetary Fund (IMF) for a three-year $940 aid million programme.

Terkper said the government had based its original revenue forecast on oil prices averaging $99.4 per barrel this year but was now using an IMF projection of oil at $52.8 per barrel.

Although he said the country’s oil production forecast for 2015 remained unchanged at 102,033 barrels per day, government oil revenues – which come from corporate taxes, royalties and its carried interest receipts – would be outsized as firms are hit by the slump in oil prices, he said.

“This is because the production costs for some of the companies will outstrip their revenues and result in losses.”

He said 487.2 million cedis would be drawn from the Ghana Stabilization Fund on a quarterly basis to bridge the gap in finances.

The government also plans to issue a $1 billion 10-year Eurobond later this year, partly to finance the deficit.

Ghana expects the IMF deal, which is due to be finalised in April, to include an additional $381 million in aid.

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