Following the cue of Egypt and Cameroon, Ghana have announced a partial removal of fuel subsidies, the third African Country to do so in a month.
The Government, on Sunday, bowed to pressure from the International Monetary Fund and ratings agencies to cut spending and restore fiscal stability by re-removing a subsidy they re-introduced just three months ago. Government officials say cutting subsidy was the only way to get its economy back on shape.
An exporter of cocoa, gold and oil, Ghana is grappling with a persistent budget deficit and rising public debt, while the local cedi currency has slumped 30 percent since January. The West African country’s government had re-introduced fuel subsidies in April unannounced, however, Reuters reports that the head of the Chamber of Bulk Oil Distributors told Reuters in June that it had spent around $85 million since then in extra payments.
Ghana’s minister of Energy Emmanuel Kofi Buah also disclosed that the government was spending around 85 million cedis ($25.6 million) bi-weekly on total fuel subsidies.
With the end of the subsidies, which will take effect on Monday, the National Petroleum Authority announced that premium petrol will now sell at 3.36 cedis ($1.02) per litre, a 23 percent rise, while the cost of diesel and liquefied petroleum gas will rise 22 percent and 15.7 percent respectively. The price of aviation turbine fuel will, however, go down 1.9 percent to 1.03 cedis.
The Energy minister said of the subsidy cut, “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.”
Last month, Ghana 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.
In Ghana, like in Egypt and Cameroon, there has been strong desire by the governments to cut fuel subsidies, at least partially. The International Monetary Fund (IMF) as well as credit agencies have also been at the forefront of urging this cut citing a need to reduce public spending and aid growth.. However, subsidies are often viewed by the masses as the one of their very few government benefits thus its cut is often vehemently attacked.
Cameroon, to stem this opposition to the subsidy cut, last Monday raised the base salary for government workers and the military while Egypt’s President Abdel Fattah el Sisi begged Egyptians to take it as a “bitter pill” for the sake of the dire state of the economy.