Finance Minister, Yaw Osafo-Maafo has dropped hints of a possible increase in petroleum prices early next year.

According to the Minister, targeted revenue from petroleum taxes fell far below expectations mainly because of the non-adjustment of petroleum products prices.

Apart from the fall in revenue, the financial problems of the Tema Oil Refinery (TOR) has deepened, setting the tone for another possible huge increase in prices in order for TOR to treat its debt on the books of Ghana Commercial Bank.

“The inability of the government to adjust prices of petroleum products has led to an accumulation of financial losses to the Tema Oil Refinery (TOR) to the tune of about ?50.0 billion a month”.

This is in addition to the stock of TOR’s debt of ?2.5 trillion that has accumulated since last year, an addition to the already existing ?1 trillion. According to Mr. Osafo-Maafo, the trend is clearly unsustainable and needs an immediate solution. In view of this, discussions between the ministry of finance, the Tema Oil Refinery and the Chief of Staff, are far advanced with respect to the treatment of the huge debt.

Mr. Osafo-Maafo sees the problem as a very big one saying, a forensic audit into it is ongoing. However, he recommends the changing of the TOR management.

In the period under review, the government has borrowed excessively from the bank due to the delay in foreign inflows. In the face of this excessive domestic borrowing, the Central Bank intensified its open market operations. Cumulatively, from the beginning of the year to July, 2002, reserve money declined by 4.7 per cent to stand at ?3,855.2 billion. The continued decline in reserve money was an indication of the slow down in monetary expansion since the beginning of the year.

According to Mr. Osafo-Maafo, the shortfall in donor inflows put tremendous pressure on government budgetary operations, resulting in the government substituting domestic resources (financing) for foreign financing. Consequently, there was a substantial increase in Bank of Ghana’s net claims on government as against a programmed net repayment by government to the banking system in the first seven months of the year.

Meanwhile, net foreign assets deteriorated sharply due to the lower than programmed donor inflows and the higher repayments of foreign commitments than programmed. “On a year-on-year basis, reserve money grew by 19.3 per cent during the year ending July 2002, compared with a growth of 42.8 per cent in the corresponding period of 2001, Mr. Osafo-Maafo told Parliament.

Cumulative receipts of foreign exchange during the seven-month period – January to July 2002, amounted to US$344.46 million. This is substantially below the programmed amounts, Osafo-Maafo said. A large part of this shortfall relates to the non-disbursement of World Bank assistance.

For the first seven months of the year, a total of US$107.74 million was received from the export of cocoa beans, including prepayments, compared with a programmed amount of $67.07 million for the period. Both actual receipts and prepayments exceeded their targets. This was because cocoa enjoyed relatively higher price during the period, and some of the prepayments for the crop were not anticipated.

Receipts from gold amounted to US$101.52 million in the period under review. This may compare with programmed receipts of US$109.42 million for the first seven months of 2002. Given that gold prices on the average have been higher than expected within the period, the slight deviation of receipts from the programme may be explained by the non-operation of some of the established gold mines.

Mining in the country has suffered a sever set back with some of them folding up. For now, it is only the big ones that have been able to keep their head above water.

In spite of the set backs the economy suffered during the period under review, the finance minister maintained that the economy is firmly on track and has done far better under the Kufuor administration than the Rawlings-led-NDC administration.