Mr Mark Evans, an economic analyst, with the Natural Resources Governance Institute, on Thursday, said Ghana has found itself ill-equipped to manage the rapid fall in oil prices.

He said the country was not fully prepared to manage swings in commodity prices and to transform its resource revenues into meaningful development outcomes because of huge liabilities incurred in order to pay the wage bill.

Mr Evans told the Ghana News Agency in an interview that in 2011, Ghanaian legislators enacted important governance reforms to manage resource extraction, having been stung by its previous experiences as a gold producer.

The Petroleum Revenue Management Act (PRMA) was meant to quarantine petroleum revenues from other fiscal revenues and enable journalists, civil society groups and parliamentarians to undertake forensic analyses of government's management of the proceeds from oil.

It also created a framework for managing revenue volatility and savings for the future.

He noted: "The wall built into the government budget to separate petroleum revenues did help create a huge amount of citizen interest in the oil sector and promoted robust oversight.

“However, the last four years offer an important lesson for all of us who have been working to promote effective and accountable financial management in Ghana.

“The benefits of enacting rules for resource revenues are lost if the broader budget is not managed with the same aims. This is something we should carefully consider.”

In Ghana, oil proceeds only contribute about eight per cent to total government revenue.

Mr Evans noted that while the government managed to save GHC1.7 billion (USD 500 million) in its petroleum funds by the end of 2014, the PRMA did nothing to constraint the damaging effects of a GHS 60 billion (USD18 billion) increase in public debt over the same period.

“The PRMA calls for a majority of annual expenditures, officially designated as deriving from petroleum revenues, to be directed toward public investment,” he said.

“Capital spending on the whole has actually fallen from about 26 per cent of spending to 17 per cent – since oil production began,” the economic analyst said.

He said organisations such as the Institute of Economic Affairs, the Africa Centre for Energy Policy, the Africa Center for Economic Transformation, along with the Bank of Ghana, had advocated for additional fiscal rules in petroleum revenue management.

He said in Ghana, such an approach would have the added benefit of giving the Public Interest and Accountability Committee the mandate to oversee key benchmarks of fiscal responsibility.

He stated: “However, Ghana could benefit from enshrining fiscal limitations in legislation. A limit on recurrent expenditure growth or the fiscal deficit would have made the problematic increases in spending in 2012 a breach of the law.

“While this would not be a foolproof method against the recurrence of such problems, it could help focus minds on these fiscal issues and can serve as a catalyst for much-needed fiscal reform and consensus building.”

The Government, he said, had shown how to build a broad consensus around this kind of law while the PRMA was, to a great extent, a success story in holding the government to an array of budget arrangements.

Mr Evans advised that “Ghana must carry the spirit of good fiscal governance embodied in Petroleum Revenue Management Act over to the broader budget.”