Oil Discovery, Real Exchange Rate Appreciation and Poverty in Ghana

CSAE conference paper: The discovery of commercial quantities of oil and gas off the coast of Ghana in June 2008 has given rise to much optimism for improved prospects for accelerated growth and poverty reduction. However, although proper management of increased foreign exchange inflows may go a long way towards helping the government achieve the growth and poverty reduction objectives, the associated onset of Dutch disease may also reduce competitiveness in key export and import-competing sectors and adversely impact the livelihoods of major parts of the population. In order to assess the extent of vulnerability of Ghanaian households—particularly those at or below the national poverty line—to the likely appreciation in the real exchange rate (RER), this paper estimates the potential short-term impacts on poverty using a micro-accounting methodology drawing on the most recent round of the Ghanaian household survey.