Affiliation:
1. University of Cape Coast
Abstract
Abstract
The abundance of resources is a blessing, but the price volatility of those resources is a curse (Luciani, 2011). Price variations and its corresponding impact on petroleum revenues is of great importance to industry players. This study adopted a quantitative approach to analyse secondary data collected from multiple sources including Public Interest and Accountability Committee (PIAC), Bank of Ghana and not limited to the Ministry of Finance to examine the extent to which crude oil fluctuations influence petroleum revenue collection and allocation in Ghana. The main statistical method employed for this research was regression and descriptive analysis. For robustness check, three post estimations were conducted. These are the Cameron and Trivedi test for heteroskedasticity, Ramsey test for omitted variables, and variance inflation factors (VIF). All three postestimation results showed that the regression estimates are robust. The study finds that at a 1% significance level, the Price of Crude Oil (PCO) and the Petroleum Revenues (PR) are statistically significant. This emphasises the crucial influence of oil prices on petroleum revenues to the state. The study also finds that factors, other than oil price, could to an extent affect petroleum revenues collection and allocation. Such includes allocations to the Ghana National Petroleum Corporation, the Annual Budget Funding Amount (ABFA), Ministerial discretions and volumes of crude oil produced and among others. Against these findings, the study recommends that some reforms be made to the PRMA to do away with ministerial discretions on capping the Ghana stabilization fund and also where necessary, consider hedging as a security against unexpected crude oil price falls.
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