A Professor of Finance at Andrews University, Williams Kwasi Peprah, has cautioned against the full adoption of a proposed GH¢1.65 reduction in petroleum prices, warning that such a move could place significant strain on Ghana’s fiscal position.
While acknowledging the need for consumer relief, the economist described the 40 percent reduction in the total tax component—advocated by several civil society organisations—as excessive, arguing that it could substantially erode government revenue and undermine the financing of critical public expenditures.
Instead, he proposed a more measured approach, recommending a 20 percent reduction in petroleum-related taxes as a balanced alternative that would provide relief without destabilising the national budget. According to his estimates, a 40 percent cut could result in monthly revenue losses of approximately GH¢600 million, whereas a 20 percent adjustment would reduce the impact to about GH¢300 million.
To offset this projected shortfall, Professor Peprah advocated for a “fiscal switch” strategy, which would involve reprioritising government spending. He suggested that certain expenditure items—particularly within goods and services or capital projects—could be deferred to the 2027 fiscal period to preserve budgetary stability while accommodating the proposed tax relief.
He also criticised proposals for a short-term intervention, arguing that a four-week relief window would be insufficient given prevailing global uncertainties, including ongoing geopolitical tensions affecting energy markets. He maintained that any meaningful intervention should extend for at least six months to allow businesses, transport operators, and households to plan effectively.
With Ghana currently implementing an economic programme supported by the International Monetary Fund, which is expected to conclude in August, the Professor emphasised the importance of maintaining fiscal discipline to meet agreed targets. He warned that uncalibrated tax cuts could jeopardise these commitments.
As a result, he recommended that any adjustment to fuel pricing be anchored in a formal mid-year budget review, allowing the government to transparently outline which expenditure lines would be reduced to compensate for lost revenue. He also cautioned against permanently removing taxes at this stage, noting the need to preserve fiscal space amid potential future pressures, including wage demands driven by inflation.
On the prospect of sourcing fuel from the Dangote Refinery, he described the move as strategically beneficial for supply chain efficiency. While global crude oil prices would still apply, he noted that Ghana could achieve cost savings through reduced freight expenses due to geographic proximity. He further indicated that transactions under the ECOWAS Trade Liberalisation Scheme could provide additional tax advantages.
He concluded that while government intervention is necessary, the most critical risk lies in inaction. However, he stressed that any response must be carefully targeted, fiscally sustainable, and supported by transparent adjustments within the national budget framework.
