Ghana partially removed fuel
subsidies on Sunday, just three months after reintroducing them, to cut
spending and restore macro stability.
The west African country, an exporter of
cocoa, gold and oil, is grappling with a persistent budget deficit and
rising public debt, while the local cedi currency has slumped 30 percent
since January.
Ghana’s government reintroduced fuel
subsidies in April, without announcing the action, and the head of the
Chamber of Bulk Oil Distributors told Reuters in June it had spent
around $85 million since then in extra payments.
The government has been under pressure
from the International Monetary Fund and ratings agencies to cut
spending and restore fiscal stability, and officials have indicated that
cutting subsidies might be a way to achieve this.
The end of the subsidies, which will
take effect on Monday, will cause premium petrol to rise 23 percent per
litre to 3.36 cedis (US$1.02). The cost of diesel and liquefied
petroleum gas will rise 22 percent and 15.7 percent respectively,
according to a statement by the National Petroleum Authority.
The price of aviation turbine fuel will, however, go down 1.9 percent to 1.03 cedis.
Energy Minister Emmanuel Armah Kofi Buah
said in an interview, “These new prices mean that we have removed the
subsidy relating to the price of the products as a first step. We are
also taking a look at the rest of the subsidy, which covers foreign
exchange differentials.”
He said the government was spending around 85 million cedis bi-weekly on total fuel subsidies.
Last month, the country suffered a
severe fuel shortage that lasted for a week, because the government
delayed payments to importers to cover the gap built up due to its fuel
subsidies.
Reuters
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