* Government windfall to peak at $2 billion in 2017
* But not seen matching government spending growth
(Recasts with analyst comment, further details)
By Mark John
DAKAR, March 24 Ghana expects oil to generate an
average annual $800 million revenues for state coffers from next
year, the finance ministry said on Wednesday of funds that will
boost the budget but still leave the country needing to borrow.
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 $800 million between 2011-2029, rising from
$490 million in 2011 to a $2 billion 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.
U.S. crude oil futures CLc1 traded at $80.54 a barrel on
Wednesday after earlier falling below $80 on news of a greater
than expected rise in U.S. crude stocks.
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 ($8.6 billion) 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.
On Tuesday the ministry 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 International Monetary Fund (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.