Revenues from oil for 2015 will see a decline due to falling international prices, forcing Government to review its budget expenditure for 2015. 

In a policy statement on the economy to Parliament, Finance Minister Seth Terkper gave the house an update on oil revenues, the euro bond issue, the impending IMF program and domestic financial matters.

“The purpose of the Statement is also to inform you of the steps Government has been taking to address the said issue to ensure that the macroeconomic objectives of Government is achieved,” he said on Thursday.

Projected revenue in oil for 2015 dropped from 4.2 billion to 1.5 billion cedis, noting that the total revenue and grants will witness a shortfall of 2.7 billion.

The immediate impact is a directive to ministries, departments and agencies as well as metropolitan, municipal and district assemblies to reduce their expenditure on goods and services.

“Following my appearance before this House in November 2014 and the subsequent approval of the 2015 Budget, the sharp decline in crude oil prices on the world market has posed and continues to pose a challenge to the achievement of the 2015 economic programme. After careful consideration of these developments and the likely impact on revenues, Government has started to intensify the implementation of approved measures to ensure that MDAs and MMDAs remain within the lower than expected projected revenues,” Mr. Terkper told Parliament.

He also stated that the measures being taken by Government are also informed by the fact that recent volatilities in cocoa and gold prices affected the country’s reserves and fiscal revenues negatively.

“It is, therefore, economically prudent to assess the impact of such commodity price volatilities on the economy on a timely basis—and as soon as they arise—and to take the required adjustment measures in order not to jeopardize the achievement of our macroeconomic objectives.”

Click here to read: Implications of the Fall in Crude Oil Prices on the 2015 Budget