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Falling Commodity Prices: Ghana's revenue forecast to suffer yet again

This has resulted in the prices of those commodities staying low, due to what some are calling excess supply onto the market.

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It appears the current challenges facing the economy in terms of government not getting the required revenue from commodity exports might not be over soon. 

A new report from the IMF and some international banks are suggesting that prices of crude and other commodities will be going down further in 2016.

The continuous decline in prices of crude oil will be influenced by the decision of producing countries, to still to release more crude oil onto the market.

This has resulted in the prices of those commodities staying low, due to what some are calling excess supply onto the market.  

Oil prices last week hit around 39 dollars a barrel. The declining prices of Gold on the other hand, will be influenced by a strong US dollar and decision by the Federal Reserve to hike its interest rate. 

This will lead to investors turning to dollar assets and bonds as safe haven for their investments instead of gold.

For many, if these predictions are anything to go by, then it should get government thinking, on how it should strategize going into next year to ensure that projected revenue for 2016, is not affected.

Government is hoping to realize some 38 billion cedis next year, about 2 billion of this should be coming from revenue from oil exports.

The developments, could lead to further cuts in government’s projected expenditure of 46 billion Ghana cedis for next year.

Already some ministries have had their budgets for next year cut, because of this challenge. 

In a related development of energyboss of French energy giant, Total, has also indicated that prices of crude oil are unlikely to recover next year.

Currently under $43 a barrel, down more than 60% since last summer, while US light crude is trading below $40 a barrel. Oil prices have not been this low for more than 10 years.

Total's Patrick Pouyanne predicted that supply will grow faster than demand next year.

He is not alone. Last Friday, Goldman Sachs put out a note suggesting prices could fall a lot further.

"While [we are] forecasting oil prices over the next few months to be near $40 a barrel, or roughly where they are trading today, there could be another 50% to fall," the investment bank said.

Source: Joy FM

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