Accra: The country's steady decline in oil production is emerging as a long-term threat to fiscal stability, eroding a once-reliable revenue stream and exposing the budget to heightened volatility at a time of tightening economic conditions, a resource governance expert has cautioned.
According to Ghana Web, the Public Interest and Accountability Committee's (PIAC) 2025 annual report highlights that crude oil production declined to 37.3 million barrels, down from 48.24 million barrels in 2024. This translated into a 43 percent drop in petroleum revenue from US$1.36 billion to US$770 million. The figures indicate a compounded annual average decline of about nine percent, with the downturn worsened by delayed liftings and absence of inflows from the Tweneboa-Enyenra-Ntomme (TEN) field.
The expert noted that the trajectory has long been evident and cautioned against an over-reliance on incentives as a quick fix to attract upstream investment. While efforts to revive activity through fiscal incentives and renewed investor engagement have been made, he emphasized that policy consistency remains crucial. He also pointed out the need for strengthening domestic participation, highlighting the role of entities like the Ghana National Petroleum Corporation (GNPC).
On the fiscal side, the implications of sustained revenue decline are becoming more pronounced, particularly for projects funded through petroleum receipts. The expert identified falling production and price volatility as main risks. While geopolitical tensions may offer temporary support to crude prices, he warned that such gains are unlikely to last.
Central to the concern is the Ghana Stabilisation Fund (GSF), which has been consistently drawn down, limiting its effectiveness. The expert contrasted this with the Ghana Heritage Fund (GHF), which has seen more consistent contributions and generates over US$40 million annually in interest income. He cited 2024 as a missed opportunity, pointing to deeper issues around fiscal discipline and adherence to established frameworks.
At a broader level, the debate over declining oil revenues should focus on managing volatility rather than eliminating it. Mechanisms like the GSF were created to provide a buffer against predictable shocks, but the challenge lies in their implementation. With petroleum revenues expected to remain uncertain, a reset prioritizing strict adherence to fiscal rules is necessary.
Reacting to PIAC's latest report, Theo Acheampong, a Technical Advisor at the Ministry of Finance, noted that previous increases in petroleum revenues were largely driven by higher oil prices rather than increased production. He emphasized that the Petroleum Revenue Management framework is designed to manage such volatility, with mechanisms in place to cushion the economy against shocks while promoting long-term stability.
Even so, the expert insists that without rebuilding buffers and enforcing rules governing petroleum revenue management, Ghana will remain exposed to predictable shocks that continue to translate into avoidable fiscal strain.