Ghana weighs locking in oil prices to keep lid on inflation

A net exporter of crude oil, Ghana could benefit from rising prices while continuing to keep domestic costs in check by agreeing to buy fuel at pre-set prices, Ofori-Atta said in an interview by phone. The finance ministry is currently studying the matter and will make recommendations in the coming weeks, he said.

“We want assurances on prices,” Ofori-Atta said. “You want to cap your bottom side and be able to enjoy the upside. By the end of March we will have clear policy direction.”

A decision to limit Ghana’s exposure to higher prices will come as the West African nation needs to limit spending and consumer price growth under a bailout plan agreed with the International Monetary Fund in April 2015. The inflation rate has almost halved in the past two years to 10.3% in January and the central bank forecasts it will decelerate to within its target of 6 percent to 10% before the end of the year.

Rising export prices for oil will bolster Ghana’s finances and help pay for a cut in fuel levies that was introduced earlier in February, said Ofori-Atta. The country prepared its 2018 budget assuming crude at $57/bbl while prices rose this year to as high as $66 per barrel.

The value of Ghana’s oil exports exceeded imports last year for the first time as producers such as Tullow Oil Plc and Eni SpA increased output from new fields, according to Bank of Ghana data. Ghana consumed over 3 million metric tons of petroleum products in the first ten months of 2017, according to data from the National Petroleum Authority.