The government of Ghana could be forced to increase fuel prices soon following the continuous depreciation of the Ghana cedi against the US dollar. This is because imports automatically become expensive when the cedi depreciates against the dollar and since Ghana imports both crude and refined oil, it means government is now spending more on the cost of oil imports.
The currency, in the first quarter of this year alone has depreciated more than eight per cent and analysts even predict it will fall further. The ramifications on Ghanaians is now being felt on cost of imported goods and according to the National Petroleum Authority (NPA), this could result in fuel hikes soon.
The Chief Executive of NPA, Alex Mould, told Citi Business News:
“If we don’t pass it on to consumers then government have to forego some projects… We have also experienced crude oil prices above $120 per barrel… and also the exchange rate has increased and we should have experienced an increase in petrol prices of over 20-22 per cent, but that did not happen because the government decided to subsidize it.”
The government has between January and March this year spent about Gh¢100 million subsidizing fuel, Citi Business News understands. In April, the NPA said government spent between Gh¢75 to 80 million in subsidies.
The government did not budget for the extra cost for these crude imports as a result of the depreciation of the cedi. Citi Business News has observed that if the currency continues to weaken against the dollar at this rate, government could be forced to pass on the extra cost to consumers and this will result in fuel price increases.