Oil Production and Ghana's Economy: What Can We Expect?

There are two key objectives in this paper. Firstly, it seeks to estimate the impacts of oil production on Ghana’s economy using a computable general equilibrium model. Secondly, it proposes policies to mitigate the adverse impacts oil activities may have on various sectors of the economy. The results indicate that production from the Jubilee oil field could increase the GDP growth rate by 3.5 percent per annum. The growth rate could more than triple if additional wells are brought into production and the natural gas utilised rather than flared or re-injected. However, the results also show that despite the increase in oil and other commodity exports, aggregate exports actually decline. Moreover, increased household disposable incomes, mostly from increase in urban employment, coupled with the decline in agricultural production, implies an increase in imports and faster growth in domestic prices relative to imported prices.