Fall in Fuel Prices not Backed by any Competent Domestic Policy ~ IERPP Fellow Opines

A Senior Research Fellow at the Institute of Economic Research and Public Policy, Dr. Kwasi Nyame-Baafi, has indicated that the recent fall in fuel prices should not be attributed to any competent domestic economic policy.

Reacting to the recent fall in fuel prices on his Facebook wall, the economist and IERPP Fellow said oil producing countries have increased production of oil, leading to reductions in their prices across the globe.

“As I have stated repeatedly, one thing is clear: the recent fall in fuel prices in Ghana is not the result of competent domestic economic policy. Far from it” he wrote.

“According to The Economist, oil-producing countries and their allies have ramped up production, adding the equivalent of 1.2% of global demand. Naturally, this has triggered a significant drop in global oil and fuel prices. Ghana is merely riding that wave” he indicated.

“Of course, lower fuel prices are a welcome relief. But any serious government knows that when the global economic tide turns in your favour, the responsible course of action is to invest and save. That’s how you build buffers for tougher times” he advised.

“But what’s happening instead? Even in these favourable conditions, the government is depleting potential reserves in a desperate bid to maintain an artificial exchange rate driven by short-term political motives. Meanwhile, Treasury bill auctions are undersubscribed, a direct result of the misalignment between T-bill rates, inflation, and the Monetary Policy Rate” Dr. Nyame-Baafi stated.

This is the economic equivalent of the prodigal son: squandering abundance, only to return in desperation when the tide turns, according to the IERPP Fellow.

“If this is how Ghana manages good times, we should all be deeply concerned about how it will survive the next downturn” he noted in his conclusions.