After recording a significant recovery, Ghana’s public finances are facing a fresh storm, which is threatening the stability and financing of the government’s expenditures.
The latest storm is fueled by a very significant nosedive in Ghana’s petroleum revenue, which is crucial for maintaining stability and keeping the government running.
The latest report released by the Public Interest and Accountability Committee (PIAC) has revealed that the country’s crude oil production has plunged by a staggering 26% in the first half of 2025. The development has slashed government oil revenues by more than half.
For a country that has come to rely heavily on oil receipts to fund its budget and fund flagship infrastructure projects, this is bad news.
Under the Petroleum Revenue Management Act (PRMA), up to 70% of oil proceeds flow into the Annual Budget Funding Amount (ABFA). Portions of this amount finance roads, hospitals, schools, irrigation systems, and industrial parks.
With oil revenues now halved due to declining production, all these projects and the budget are at risk.
The significant drop in oil money can affect everything from contractors’ payments to new infrastructure projects since the pipeline is drying up.
Aside from the impact of the drying revenues affecting the current generation, it also has a severe impact on the future generation.
Ghana’s two sovereign oil savings accounts, the Stabilisation Fund and the Heritage Fund, are designed to buffer against and leave a legacy for future generations. However, the drying of the oil revenues means these future funds are at risk.
The downturn also hits the Ghana National Petroleum Corporation (GNPC), which depends on its share of petroleum receipts for exploration and investment. A revenue collapse could delay future oil field development and deepen production decline.
“There have been some drawbacks with respect to revenue inflows to them, especially GNPC, since revenue has been halved. It is also going to affect GNPC’s ability to operate within its mandate well, and I think that we need to really look at the space,” Energy Analyst, Benjamin Nsiah remarked.
Experts warn that if the slide continues, the government may have to borrow to maintain ongoing infrastructure and recurrent spending, eroding the very principle of using oil as a non-debt development tool.
The timing couldn’t be worse. The country is preparing to exit the IMF bailout program next year, and it needs revenues to avoid borrowing and keep public debt under control.
This means that the government must act quickly and explore new ways to plug the funding gap to prevent any mishap.
