The figures, in a website survey asking Ghanaians how the windfall should be used, underline that proceeds from output at its Jubilee field due to start late this year will only transform the poor West African state if used carefully.
Using a 10-year average price of oil at $65 barrel, the ministry predicted that annual government revenue from oil and gas would average $800m between 2011-2029, rising from $490 million in 2011 to a $2bn peak in 2017.
The projection was based on the assumption that Ghana will produce 500 million barrels of oil over the next 20 years, more modest than an earlier official estimate of 800 million barrels of reserves and well below upbeat expectations of double that.
“Those are very conservative numbers, but we were expecting them to err on the side of caution,” said Ridle Markus, Africa strategist at Johannesburg-based Absa Capital, noting his house based its projections on a higher $80-85 per barrel of oil.
Avoiding the oil curse
Even at its peak, the oil windfall is only a fraction of government spending which this year is due to rise by 40 percent to 12.1 billion cedis ($8.6bn) and push the deficit to 7.5 percent of national output from 4.2 percent in 2009.
“Even with oil, Ghana is going to have to borrow,” noted Sampson Akligoh, economic analyst at Accra-based Databank Financial Services, while acknowledging that oil revenues would help “the fiscal space improve over the medium term”.
The ministry calculated that if oil and gas revenues were distributed directly to individuals, each Ghanaian would receive just $20 next year, rising to $75 in 2017.
The ministry recently announced proposals for its oil wealth to be used to support agriculture, infrastructure, health and education projects, with part of the surplus funds to be put into investment-grade international securities.
“We have been keenly aware of the so-called ‘oil curse’ that has come to be associated with oil-rich, developing countries,” according to the draft of the proposals, a reference to the unrest seen in oil nations such as nearby Nigeria.
Buoyed by oil and its cocoa harvest – the second largest in the world after Ivory Coast – Ghana’s economy is seen growing around 15 percent next year, more than double this year’s rate.
While the IMF believes oil could help Ghana join middle-income countries such as Cameroon within 10 years – meaning it would have to almost double its national income per capita to $1,000 – some advise caution.
“Oil is no panacea,” said Razia Khan, Africa regional head of research for Standard Chartered in a February research note.
“The ability of oil to make a meaningful contribution to the economy depends on the wider policy framework,” she added, urging fiscally conservative policies that supported growth, for example by targeting spending at infrastructure improvements.