Ghana Petroleum Fund Experiment. ´Can a Petroleum Fund help Ghana manage its petroleum revenue (wealth)? An Experimental Inquiry´
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Ghana starts petroleum production and export business in the third quarter of 2010. The management of the petroleum tax revenue is seen as timely fiscal policy decisions by the government and its partners. These policy decisions could either lead to a “blessing”; managing the revenue well or a “curse”; mismanaging the revenue, if right decisions are not taken. Studies also show that people commonly misperceive the dynamics of a system when making decisions, resulting to poor outcomes of their decisions. The following hypotheses were made: first, policy makers in Ghana will mismanage its petroleum tax revenue through a Fund- ‘curse’. Second, policy makers will misperceive the dynamics of a petroleum economy while making spending decisions. Third, misperceptions lead to a cyclical development of the total capacity utilisation. A system dynamics model-based experiment was carried out in Ghana to test these hypotheses. The model behind the experiment captured a simple macroeconomic dynamics of a petroleum economy, which shares some essential features of Ghana’s economy. The experiment was supported with administering of questionnaire, interviews and field data. Selected policy makers from the Bank of Ghana, Ministry of Finance and Economic Planning and the Parliamentary Committee on Finance formed the subjects of the experiments. The experimental output indicates a potential for policy makers in Ghana managing its petroleum tax revenue well through a Petroleum Fund. Most policy makers seemed to have based their spending decisions on the Fund inflows, leading to misperceptions of the dynamics of the petroleum economy. This created a cyclical development of the total capacity utilisation and other economic indicators. It is recommended that, a Petroleum Fund is established in Ghana with a strong fiscal policy and a discipline commitment attached to its management.
PublisherThe University of Bergen
SubjectGhana Petroleum FundPetroleum Tax RevenueSystem dynamicsPublic SpendingTotal Capacity UtilisationMisperceptions
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