Date: July 13, 2012, 11:07 am


Alarmed by what seemed like an imposition of IMF’s age-old neo-liberal demand for full cost recovery of fuel consumption in Ghana, the Integrated Social Development Centre (ISODEC), a rights-based policy research and advocacy organization last week, in a press statement,  cautioned the Mills administration of dire consequences should it succumb to the IMF pressure to remove fuel subsidy.

ISODEC argued in its statement that  subsidy on fuel offers the country the opportunity to support various critical sectors of the economy, and in that process, promote the well being of the citizenry. It offers support to agriculture, industry, water and electricity sectors. The statement noted among others, that e withdrawal of subsidy will lead to higher fuel prices and would have undesirable economy-wide effects. It will mean higher transport cost for most workers, higher food prices, higher production cost for the manufacturing sector where boilers are used and where as a result of unreliable supply of electricity, generators tend to be used a great deal.

ISODEC’s attention has been drawn to a government assurance this week that subsidies on petroleum would be kept in line with the demands contained in its press statement of May 31, 2012. Speaking on Joy FM this week, the Deputy Minister of Finance, Hon. Fiifi Kwettey disclosed that government will keep the subsidy and rather look for areas in the budget where cuts are possible, to finance the subsidy.

While ISODEC welcomes the turn of events, particularly the pledge to maintain fuel subsidy, the organization believes that the issues of how much subsidy Ghanaians enjoy on their fuel consumption, who benefits most from the subsidy, the implications of subsidy withdrawal on government’s budget and others need to be further explored to inform future actions.

We wish to state that, we cannot allow the matter to rest just because of the assurances received from government. It is important, we believe, to come to a firm conclusion on whether or not it is strategically appropriate to keep fuel subsidy, and if not agree on what remedial measures that would be required for its withdrawal. Taking the subsidy on petroleum and spending that money on education or health as was proposed by the Minister of Finance, Hon Dr. Kwabena Duffour, following the IMF mission to Ghana last week, will in our view not mitigate the direct impacts of the withdrawal of the subsidy.   

In our statement issued last week, we recalled a World Bank sponsored Poverty and Social Impact Assessment (PSIA) study on the policy to remove subsidies on energy consumption, undertaken as part of the preparations towards deregulation of the sector. We noted that for unexplained reasons the report of the study was never made public for the purpose of open discussions on its findings. Though the report is dated now, we believe that most of its findings will still be relevant to our current situation and so, we repeat our call on the Ministry of Energy to publish it. Ghanaians have a right to know what recommendations were made in that report, and be allowed to debate the adequacy or otherwise, of the recommended measures to counter the harsh effects of fuel price hikes within a deregulated environment.

Meanwhile ISODEC will take steps in the coming days to provide the platform for this crucial debate to begin; and this will counted as its contribution to participatory decision-making which constitute the bedrock of any true democracy.