OVER the past seven months, the global oil price has fallen sharply, leading to a major shortfall in the revenue of oil exporting countries around the world.

From the high of $110 per barrel, the price has dipped to an all-time low of below $48 per barrel, pushing the oil exporting countries into difficult situations.

According to Market Watchers, the continued unprecedented fall in price could be attributed to two fundamental reasons: low demand for the product, and the increase in oil production in North America, especially the United States.

In addition, the oil producing countries are reported to have refused to cut production as a way of driving up the price.

As matters stand now, oil exporting countries are losing revenue, with Ghana expected to lose $500 million in revenue inflow from oil exports.

“This year, we are expecting about $1.2 billion from oil revenues, but the price of crude oil has gone down and from the estimates that we have, we are going to lose about $500m in revenue coming into the economy,” President John Mahama is reported to have lamented in Germany, in a speech to the Ghanaian community.

Despite the fact that Ghana is a modest exporter of about 120,000 barrels of oil a day, the commodity is a significant revenue earner for the country.

The obvious effect of the drop in the price is that the country is under a serious threat of recording fiscal deficit due to the shortfall in revenue.

The situation is likely to hit the economy, and may throw the budget out of gear.

That is why government must consider measures to control spending or look elsewhere for funds to prop up the budget to meet its developmental agenda, and other commitments.

In general, consumers may benefit from lower petroleum prices, however, such prices would not offset the wider effect on the economy. Government’s development plans therefore, may suffer because of the glut and its low prices.

As the fallout from the price drop continues, the Times wishes to suggest an open public debate on the situation to solicit suggestions from all shades of opinion, on how the country can come out of it unscathed, since it is unclear how government would make up for the shortfall.

This is the time for everyone to contribute to finding solutions to the problem to ensure economic stability.

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