The Ministry of Finance has disclosed that government will not terminate the 1.5% levy on electronic transactions, despite its application to the International Monetary Fund (IMF) for economic assistance.
This was contained in a statement from the Ministry on Tuesday, addressing key questions regarding government’s ongoing engagement with the Fund.
Regarding the controversial levy, the Ministry explained that government will add the proceeds from the levy to the support from the IMF in order to shore up the country’s economic fortunes.
Addressing the question of whether the levy will be scrapped, the Ministry said, “NO. The IMF lending to Ghana will be for balance of payments support (i.e. to shore up the international reserves).
“Government is committed to ensuring the smooth operationalisation of all taxes including the e-levy to ensure that in addition to the IMF’s resources, government can continue to support its developmental goals on its own while ensuring that tax-to-GPD ratio increases to the peer range of 16%-18%”.
It added that, “An IMF-supported programme is likely to encourage the government to investigate the factors hindering the success of the e-levy (including by providing technical assistance if needed) and come out with strategies to improve it”.
The Finance Ministry also noted that additionally, other tax measures could be considered for the medium-term.
By this information, Ghanaians will continue to pay the levy, despite the widespread public angst against the policy.
The tax initiative, which was rolled out around May 1, has however failed to generate the projected revenue for the government. According to a leading member of the governing New Patriotic Party, Gabby Otchere-Darko, the tax has only generated less than 20% of its targeted returns.
The situation is what has consequently forced the country to resort to the IMF for a bailout.
In that regard, a team from the International Monetary Fund (IMF) is expected to arrive in Ghana on Tuesday, July 5 to begin negotiations with government on the economic support it is seeking.
The IMF officials – comprising senior officers from the Fund and local staff – will meet the Finance Ministry, the Economic Management Team and the Presidency during their stay.
A statement issued by the Finance Ministry added that after their arrival on Tuesday, in-person meetings with the government would begin on Wednesday, July 6.
Finance Ministry statement
“The Ministry further takes this opportunity to assure Ghanaians of the government’s commitment to successfully negotiate a programme with the IMF in the coming months in support of Ghana’s economic recovery”.
Among other reasons, their visit to the country would largely involve deliberations on the modalities for a package to support Ghana’s ailing economy.
It is expected that details of the bailout programme and its conditionalities will be made public after several engagements.
Government’s decision to seek economic refuge from the Fund has been received with mixed reactions as some, especially members of the National Democratic Congress (NDC), argue it has been long overdue.
Some have also expressed concerns over what the move could mean for public sector jobs and social programmes with organised labour kicking against the decision.
