Monday, November 22, 2010

Ghana to grow economy from oil revenues: finance minister

ACCRA — Ghana, to start commercial oil production next month, will use crude revenues to transform its economy, aiming to avoid the pitfalls of nations finding new resources, the finance minister said Thursday.

Oil is expected to account for six percent of Ghana's domestic revenue in the 2011 fiscal year, Finance Minister Kwabena Duffuor said while presenting next year's budget to the parliament.

He did not estimate by how much this could increase after production begins in December but vowed Ghana would "avoid the pitfalls that have characterised some countries on the discovery of new national resources".

"A major challenge will be how the oil revenues will be used to transform the economy and accelerate growth without sacrificing macro-economic stability and accentuating income inequalities," the minister said.

Nigeria is Africa's leading oil producer and the world's eighth exporter but most of its people live in poverty, with revenues mismanaged or stolen, triggering anger in poor communities in the oil-rich Niger Delta region.

Chiefs from Ghana's oil-rich western region are demanding a 10 percent share of revenue when production begins next month.

Duffuor said that for the first three to four years after production begins, "the oil revenue will be considerably lower than the non-oil tax and non-tax revenues." He gave no figures.

"Total revenue from oil into the (2011) budget is estimated at 584 million cedis (406 million dollars)," he said.

Ghana's Jubilee field, discovered three years ago, and one of the biggest finds in West Africa of the past decade, is believed to hold about 1.5 billion barrels of reserves.

The country, the world's second largest cocoa producer, has also announced the discovery of another "extensive deepwater petroleum province" offshore.

Its gross foreign reserves increased to 3.9 billion dollars in October from 3.1 billion at the end of last year, the minister said.

GDP, which grew by 4.1 percent last year, is expected to reach 5.9 percent this year and 12.3 percent next year, he said.

Inflation fell from 20.7 percent at the end of June 2009 to 9.3 percent in October this year due to "prudent fiscal management, continued monetary restraint...(and a) good food harvest," the minister said.

The fiscal deficit was meanwhile expected to decline to a target of 7.5 of GDP.

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