Ghana Government cuts fuel subsidies

 We will see next week how this is affecting people's lives.  Likely not a good thing for families struggling.  Will it bring rapid inflation? 

Ghana Government cuts fuel subsidies

By Kwasi Kpodo
ACCRA, Feb 17 (Reuters) - Ghana cut fuel subsidies on Sunday as its new government took measures to curb spending after the West African exporter of cocoa, gold and oil overshot its budget deficit target by almost 100 percent last year.

The National Petroleum Authority (NPA) said in a statement that fuel price hikes were necessary to cover the cost of an increase in crude oil prices and the depreciation of the local cedi currency by about 14 percent last year.

The new prices, which took effect on Sunday, saw premium petrol and diesel prices jump 20 percent per litre in cedi terms, while Liquefied Petroleum Gas (LPG) rose 50 percent.

Prices of kerosene, marine diesel and residual fuel oil also increased 15 percent per litre.
The decision to cut subsidies came days after Fitch rating agency revised the nation's outlook to negative from stable, citing the severe deterioration of its fiscal deficit.

 

"The government has funded the budget deficit mainly through borrowing at high interest rates on the domestic market, at 22.8 percent for 91-day T-bills," the agency said on Friday.

"While current expenditure has surged, the share of capital expenditure has fallen, which could harm longer-term growth prospects and worsen debt dynamics," Fitch said.

Decisions by governments in the region to cut fuel subsidies have previously led to social unrest. Nigeria's government was forced last year to reinstate some subsidies it had cut after several days of strikes and protests, while Ghana's last attempt to cut subsidies more than two years ago resulted in opposition-led street protests.