Government has been advised to establish a National Savings Fund and encourage domestic savings attitude among the citizenry when the country starts oil exploration next year. According to the Director for Policy Analysis at the Institute of Statistical, Social and Economic Research, Dr. Peter Quartey, this will help to reduce the vulnerability associated with oil revenue. He was speaking in Accra at a lecture on Oil and Ghana’s Development: Monetary and Exchange Rate Management with Capital Flows.

The lecture which was organized by the Institute of Statistical, Social and Economic Research, (ISSER) in collaboration with the Fredrick Ebert Foundation brought to the fore measures government can implement in order for Ghana not to catch the Dutch disease in its oil exploration. According to the Director for Policy Analysis at ISSER, Dr. Peter Quartey, said oil revenue is volatile and can negatively affect development especially during downturns. He said benefiting from the oil revenue in the country will depend on the structures put in place to maximize the gains from its exploration.

Dr. Quartey said a saving fund which will provide a separate account for managing the oil funds is one of the surest ways to maximize gains. Dr. Peter Quartey mentioned higher levels of investment, facilitation of technology transfer, enlargement of market access and enhanced management skills as some of the benefits of capital inflows as a result of the oil revenue to be accrued. He said capital inflows will however put pressure on the exchange rate thus leading to higher inflation, real appreciation, and lower domestic savings and reduced domestic interest rate.

The Programmes Coordinator of the Fredrick Ebert Foundation, Danaa Nantogmah said the lack of a national development strategy will hinder the development of the country’s oil revenue. Experts say the country will get between 800 million to 3 billion barrels of oil during exploration with a production capacity of 120, 000 barrels per day in 2010. This will rise to 240,000 barrels per day in three years time. Currently the country’s crude consumption is between 40,000 and 60,000 per day. Therefore moving to 240,000 barrels per day will make the country a net exporter of oil. They say distributing the oil revenue among citizens as a way of promoting equity is not in the best interest an economy such as Ghana’s but rather investment in the agricultural sector will promote equitable development.