He claimed that while the 2022 Budget did not set aside funds to be used to subsidise prices of petrol, diesel and liquefied petroleum gas (LPG) among others, policies that were meant to cushion the public against hiking prices had been abandoned.

He told the Daily Graphic yesterday that the situation exposed the economy to the grave effects of rising fuel prices, including increased inflationary pressures and decline in consumption with the potential to weaken economic growth.

Consequently, he said it was imperative for the government to find a sustainable way to mitigate the effects of the rising fuel prices on the economy.

That, he said, would help ensure that the effects of the rising fuel prices did not combine with other challenges to worsen the economic plight of the citizens.

Fuel prices

The former Minister of Finance spoke to the paper on the recent increase in prices of refined petroleum products.

Both diesel and petrol suffered about a 25-pesewa increase across the pumps, reflecting the soaring price of crude oil in the global market.

Between November and January, prices of crude oil climbed up from $75 to around $85.

With crude oil prices projected to continue with the upward run,following increased geopolitical tensions and sustained recovery in the global economy, Mr Terkper said not much could be done by the government to cushion consumers.

That, he said, was the inability of the government to either set aside funds for subsidy or continue with policies that were initiated to cushion consumers against high prices.

Strategic stocks

Explaining further, the economist and chartered accountant said the government had abandoned the strategic stocks policy that was meant to act as a stabiliser against soaring prices.

It has also reinstated the Price Stabilisation and Recovery Levy (PSRL) this month while continuing to use a substantial portion of the Energy Sector Levies Act (ESLA) proceeds that were earmarked for settling arrears and subsidising fuel prices to also pay off or service the ESLA bonds, Mr Terkper said.

IMF programme

These, he said meant that consumers were likely to be left to their fate as fuel prices climbed up.

“Now, we have to find money to subsidise the price, if not the situation will continue but here is the case that we cannot do much with borrowing,” he said.

In mid-January, ratings agency, Fitch Ratings downgraded the economy from B to B negative, effectively locking the country out of the international capital market for the purposes of borrowing.

While decrying the situation, he reiterated his earlier position that the time had come for the country to seek a programme with the International Monetary Fund (IMF) to help regain credibility and investor confidence.

PSRL proceeds

Mr Terkper had earlier advised the government to use money accrued from the PSRL to build strategic stocks of crude oil and use same to cushion consumers in the event of soaring world market prices of the commodity.

Mr Terkper, who introduced the PSRL in 2015, said the current rising prices could have been better if the government had carried through with the building of strategic stocks for rainy days.

He said the levy was introduced as an avenue to procure and store crude oil whenever prices were low and release same into the market whenever the prices rose.

He described it as a strategic policy decision by the National Democratic Congress (NDC) to build buffers in the wake of Ghana becoming a lower Middle-Income Country (MIC).