Government to scrap fuel subsidies by September

June 4, 2015 6:34 AM

Ghana exports gold, cocoa and oil and until 2013 its economy was one of the fastest growing in Africa, but it has slowed sharply due to a fall in commodity prices and a fiscal crisis seen in a high debt-to-GDP ratio and a weakening currency.

Government to scrap fuel subsidies by September

Ghana's government will scrap its remaining fuel subsidies by September in a bid to reduce expenditure while ensuring stable supply to drive economic growth, Petroleum Minister Emmanuel Buah told Reuters on Wednesday.

The government has set aside 50 million cedis ($12.5 million) for subsidies in 2015 down from $150 million last year and took the decision in line with the terms of a three-year International Monetary Fund aid programme aimed at restoring fiscal stability.

Ghana exports gold, cocoa and oil and until 2013 its economy was one of the fastest growing in Africa, but it has slowed sharply due to a fall in commodity prices and a fiscal crisis seen in a high debt-to-GDP ratio and a weakening currency.

The country also faces a severe electricity shortage with frequent power cuts that have hurt the economy and angered voters. The government will safeguard against abuse or rapid price rises on bus fares caused by the decision, Buah said.

"The objective is to fully decontrol fuel pricing," Buah said. "It also means that the perennial burden of subsidy arrears on the government's budget will come to an end."

Ghana subsidizes fuel under a partially regulated downstream sector run by the National Petroleum Authority but the government will allow oil distributors to fix pump prices in a process to be implemented between July and September.

The government started reducing fuel subsidies last July after previous attempts to scrap them failed.

($1 = 4.1000 Ghanaian cedis)