Deregulation - An old promise to IMF

THE deregulation of petrol pricing system, as a policy, is a commitment made by the Government to the International Monetary Fund (IMF), as far back as September, last year.

The situation appears non-negotiable since the Government had been spared sanctions for misreporting on a purported increase in tariffs on water, some time in 2003, when in fact, it had not done so.

To be seen to be going back on its word, once again, would undermine the credibility of the Government by the IMF.

In an IMF report, published last year, it was noted that:

"The (Ghana) Government's decision to leave petroleum prices unchanged, ahead of the election in December 2004, creates a source of vulnerability for the budget, even though the authorities have taken adequate measures to address the anticipated costs of the resulting subsidies to petroleum producers, while protecting poverty-related expenditures.

"Nevertheless, it will be critically important for the authorities to follow through on the commitment to replace the current pricing regime, with a new regime, which will absolve the Government from making pricing decisions, and to implement it, as announced, by February 15, 2005.

The report also referred to the case of misreporting and noted:

"The Executive Board regretted the authorities' failure to ensure the accuracy of information relating to a prior action to bring electricity and water tariffs, in line with the programme's automatic adjustment formulae (based on calculated values through September 2003).

"Electricity tariffs had been implemented, as reported, but water tariffs were not adjusted. The Board took note of the authorities explanation for the non-observance of the prior action, which was attributed to miscommunication and misjudgement."