E-Levy will not be discontinued despite government going to IMF – Finance Ministry

Ken Ofori Atta121112212112 Ken Ofori-Atta, Finance Minister

Tue, 5 Jul 2022 Source: www.ghanaweb.com

Finance Ministry answers FAQs on IMF bailout

E-Levy should be scrapped after going to the IMF – ACEP

IMF assistance to help shore up foreign reserves

The Electronic Transfer Levy will not be discontinued despite an application to the International Monetary for a financial bailout, the Finance Ministry has said.

The Ministry said the IMF bailout is a means to help the country shore up its foreign reserves thus tax measures including the electronic transfer levy will not be cancelled.

Secondly, the IMF is to allow for concessional/cheaper financing to shore up international reserves, stabilize the cedi, continue smooth payments for imports (petroleum products, pharmaceuticals, medical equipment, among others) and restore conditions for strong economic growth (including support for government flagship programmes), while correcting underlying problems.

The Finance Ministry made this known in a statement seeking to address some frequently asked questions on Ghana’s move to seek support from the IMF.

Answering the question, “Will government terminate the E-Levy because IMF will give Ghana money?"

The Finance Ministry said, “NO. The IMF lending to Ghana will be for the balance of payments support (i.e., to shore up the international reserves). The government is committed to ensuring the smooth operationalization of all taxes including the e-levy to ensure that in addition to the IMF’s resources, the government can continue to support its developmental goals on its own while ensuring that the tax-to-GPD ratio increases to the peer range of 16%-18%."

It added: “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. Additionally, other tax measures could be considered for the medium-term.”

Meanwhile, there’s been calls for the scrapping of the tax since it has been reported that only 10% of the estimated revenue has been generated so far.

Executive Director of the Africa Centre for Energy Policy, Benjamin Boakye, noted that the government was earlier warned about the effectiveness of the E-Levy, however, the government paid no heed to the cautions.

“The E-Levy, we told the government it wasn’t going to work from the start and they didn’t listen. It is part of the reasons why we woke up one day and we realized that we are getting 10 per cent.”


Source: www.ghanaweb.com
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