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5 key measures Ghana must undertake to secure a successful IMF deal

Ken Ofori Atta Ken Ofori Atta Ken Ofori Atta Ken Ofori Atta Ken Ofori Atta Ken Ofori Atta Ken Ofori Finance Minister, Ken Ofori-Atta

Sat, 15 Apr 2023 Source:

The finance minister has pointed out five key measures that will ensure Ghana’s success in securing financial support from the International Monetary Fund.

The minister outlined these in the Investors’ Presentation at the ongoing IMF/World Bank Spring Meetings in Washington D.C,USA

The measures are;

Electricity tariff hikes

Ghanaians have experienced a continuous hike in electricity and water tariffs since August 2022. According to the government, the tariff increments were necessary to ensure that the Electricity Company of Ghana and Ghana Water Company operate efficiently.

The tariff hikes since then have accumulated to an increase of about 60%. Ofori-Atta noted that this was a necessary condition for Ghana to move ahead with its talks with the International Monetary Fund.

Revenue enhancing measures, including an increase in VAT, E-Levy review

The government, in the 2023 Budget, announced an increment in the VAT rate from 12.5 percent to 15.0 percent, which subsequently took effect on January 1, 2023. Also, the rate for the Electronic Transaction levy was reviewed from 1.5% to 1%. Also, the government is looking to implement some new taxes, including lottery and bet tax, amended excise duty, withholding taxes, etc.

An ambitious 2023 budget

This includes reaching a 1.5% of Gross Domestic Product primary surplus in the medium term, bringing inflation below 8% in the medium term, and restoring external buffers with gross international reserves reaching 3 months of import cover by 2026.

This also includes the government achieving a real Gross Domestic Product growth target of 5% over the medium-term and enhancing competitiveness with exports surpassing 37% of GDP in the medium run.

Another key measure is to ensure fiscal and debt sustainability.

Ofori-Atta said the government is committed to rebuilding reserve buffers, mobilizing external concessional financing from multilateral and bilateral partners, and suspending external debt service payments.

However, the minister assured that government will safeguard social protection programmes and ensure the burden of adjustment is fairly distributed.

“It will reinforce and improve the targeting of social spending to protect the most vulnerable from the impact of the economic crisis, as well as fast-track the implementation of growth-oriented socio-economic policies, such as Ghana CARES, to mitigate the impact of the pandemic and support economic recovery,” the minister said.

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