The continuous depreciation of the Ghana cedi against the US dollar may soon force the Ghanaian government to increase the prices of petroleum products in the West African country.
Because imports automatically become expensive when the cedi depreciates against the dollar and since Ghana imports both crude and refined oil, meaning that the Mills/Mahama-led government is now spending more on the cost of oil imports.
In January 2012 alone, the cedi recorded 5.9% depreciation against the US dollar. But, the Bank of Ghana (BoG) and government explained that the decline experienced in January was transitory since it reflected a higher demand for foreign currency by businesses to make payment for goods and services procured in December for Christmas.
The consequences on Ghanaians is now being felt on cost of imported goods and according to the National Petroleum Authority (NPA), this could result in the increase of fuel prices very soon.
The Chief Executive of NPA, Alex Mould, said “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 subsidise it.”
The government has between January and March this year spent about GhC 100 million subsidising fuel. In April, the NPA said government spent between GhC 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.
Ghananewslink.com gathered that if the currency continues to weaken against the dollar at this rate, government would be forced to pass on the extra cost to consumers and this will result in fuel prices hike.