The Africa Centre for Energy Policy, ACEP, is predicting a significant drop in government’s projected revenue for the year 2020. The Centre has thus, projected oil revenue shortfalls for Ghana’s for the year.
ACEP’s projection is owed to the drop in the global oil price due to the novel coronavirus pandemic, which is biting economies hard.
Oil prices on the international market, which was $66.25 per barrel at the start of the New Year, has fallen steeply to $26 per barrel as of March 21, 2020.
This fall in oil price is linked with the outbreak of COVID-19, which has affected global economic growth and demand for oil, thus creating excess oil supply
However, ACEP, in a press release issued on Sunday, March 22, 2020, forecast that government revenue projection of $1.567 billion from oil revenues, which is hinged on a price prediction of $62.61 per barrel, may not be realised.
According to ACEP, based on the average price prediction of $40 per barrel, the receivables from oil could drop to $743 million, a shortfall of about 53 percent.
This, they believe, could pose severe implications for the budget particularly with regards to physical infrastructure and debt servicing.
Ghana’s infrastructure development programme, In the 2020 budget, is heavily dependent on oil revenues.
Owing to this, about 80% of government’s domestic revenue for its capital budget was to be sourced from the Annual Budget Funding Amount (ABFA).
Read more from ACEP in the attached document:ACEP_Implications-of-low-oil-price-on-oil-producing-countries