Question

Describe the contribution of the oil abd gass sector to the economy of Ghana

Answer 1

The researcher found out how Ghana's oil discovery could cause an increase in FDI inflows into the country. Contribution to the Ghana's economic development and examine the proper policy for management of the oil revenues.

Contributes of FDI to the productive capacity of the economy. FDI to add to the productive capacity of Ghana and GDP increases. Reduce imported inflation to some extent by receiving oil supplies from the production of domestic sources. A balance approach must be adopted when ghana starts exporting oil because hiking of the oil price could appreciate the currency of the country and this improvement of it's balance of payment. It affects negatively to the agriculture products.

The use of an oil fund to the Ghanaian economic situation and fiscal position that the revenues are put to good use. An initial higher spending rule and subsequent reduction is meant to reduce the country's fiscal deficit position and stabilise the economy. The future flows "the fund" Would be free from pressure to support budget deficit.

Oil revenues can be uncertain and volatile. This affects govt expenditure thus with the mechanism of an oil fund, the govt can stabilize the economy. The fund should also be governed with rules and guidelines. Ghana doesn't have any knowledge and technology in oil production. It could formulate policies in the form of local content clauses that encourage the training and transfer skills. This can build up Ghanaian workforce that would be at the front of the petroleum industry and use of local goods and services in the activities of the oil sector would build up Ghanaian goods and retained capital. This capital could be invested into other sectors and also reduce some poverty in rural areas.