The International Monetary Fund (IMF) has justified the adoption of three mobilization measures as well as the increase in utility costs as Ghana attempts to fix its balance of payment problems.
Despite criticisms, the Excise Duty, Growth and Sustainability, and Income Tax Amendment laws aim to generate GHS4 billion for the country each year.
These, along with the expected tariff increases in June, are deemed crucial components of the country’s US$ 3 billion, three-year Extended Credit Facility with the IMF.
Dr. Leandro Medina, IMF Resident Representative in Ghana has been arguing in favour of adjustments in the face other tough economic conditions.
“The revenue measures that have been passed between December and April are part of the prior actions. It’s very important to mobilize revenue. Revenue to GDP in Ghana is very low as compared to other countries. Ghana is making a huge effort to increase revenue, and this will be done mainly by increasing the tax base. What is important to say is that this is a large and front load fiscal consolidation”, he said on the Point of View on Citi TV.
Also, Government will be under pressure to cut down its expenditure following the approval of the country’s IMF bailout.
It is the expectation of the IMF that the government of Ghana under its obligations rolls out a raft of measures aimed at ensuring that the distressed economy is put on the track of recovery during the period of the three-year extended credit facility.
The IMF Representative in Ghana said the government must prioritize fiscal adjustments to ensure it meets the performance criteria for the disbursement of the other loan tranches.
“On the fiscals there is quite a sizeable adjustment in the 2023 budget and what we expect in the duration of the program, On the structural transformation, it has to do with the reforms and measures that improve the business climate and the growth of private sector.”
“So, there are a lot of reforms within the context of the program that look at what you can do within these three years to ensure that there is a strong foundation in growth and that is the effect of that structural transformation”, Dr. Leandro Medina added.