The Falling Crude Oil Prices: Mitigating the Risk
August 31, 2015Is Ghana’s Approach to Petroleum Revenue Management Still Credible?
November 5, 2015
The Institute for Fiscal Studies (IFS) and the National Resource Governance Institute (NRGI) jointly hosted a forum on the 2016 budget on November 5 at the Alisa Hotel in Accra. The theme for the forum was: Making the Most of Petroleum Revenues.
Nana Frimpong Anokye, Omanhene of the Agona Traditional Area and a Member of the Governing Council of IFS, chaired the event, which also had in attendance Mr. Alex Ashiagbor, the Governing Council Chairman, and Dr. Kwabena Duffuor, Founder of IFS.
In an opening address to the forum, Mr. Alex Ashiagbor said the main idea for the event was to examine the challenges and risks confronting the 2016 budget, what should be expected in light of the challenges and risks, and how natural resource revenues could be better managed to contribute to the sustainable growth and development of Ghana’s economy.
On the last issue, Mr. Ashiagbor highlighted the following as important preconditions and policy measures which will facilitate the creation of broad-based prosperity from the exploitation of natural resources:
- Government must ensure strong and effective governance, not just at the national but at all levels of governance. An important element of this is the development of strong independent, accountable, and transparent institutions that can help manage the revenues from natural resources.
- Fiscal discipline is an important prerequisite, together with policies to smoothen out swings associated with natural resource revenues, proper exchange rate management, and prudent management of the public debt.
- Using natural resource revenues for short-term purposes such as budgetary support is not advisable; rather, the revenues should be invested in long-term capital accumulation, both human and non-human, to establish a strong basis for sustainable growth.
- It is also important to ensure inclusiveness, ie. active participation of all sectors in the growth process, and to reduce the threat of the so-called Dutch Disease, which refers to the situation where natural resource booms lead to the decline of other important economic sectors.