Ghana’s revenue-to-GDP ratio embarrassingly low, says Ofori-Atta

The Minister for Finance says the government is moving to turn the tide in favour of more efficient and equitable revenue mobilisation for the nation

The Finance Minister, Ken Ofori-Atta, has decried the country’s low revenue mobilisation, saying that Ghana’s revenue-to-GDP ratio is embarrassingly low.

Speaking with Kweku Adoboli on Asaase Business Round Table on Thursday (18 November 2021), Ofori-Atta said the government is working with other government agencies to plug loopholes in the country’s tax collection.

“We’re embarrassingly low at 12 to 13% of revenue to GDP,” he said “and that has to change. We launched the Revenue Assurance and Compliance Enforcement (RACE), in which we are really combining the Ministry of Finance, GRA [Ghana Revenue Authority] and the security agencies to make sure we plug areas such as the mineral areas – gold – moving to petroleum bunkering, the border control, etc.

“So that’s going to be able to squeeze in at least, we estimated, GHC500 million [which] will come through from that effort. We also introduced the Exemptions Bill and the Fees and Charges Bill into Parliament and so we’re going to get more.”

Tax efficiency

As part of efforts to facilitate effective and efficient mobilisation of taxes in Ghana, the vice-president, Dr Mahamudu Bawumia, launched the Revenue Assurance and Compliance Enforcement (RACE) initiative in August this year, as promised in the 2021 Mid-Year Budget Review.

In the first half of 2021 alone, the GRA experienced a GHC212 million shortfall in tax revenue. 

The GRA collected GHC25.89 billion in tax revenue, as opposed to the GHC26.1 billion targeted for the period.

RACE is expected to identify and eliminate revenue leakages while reinforcing the culture of compliance, especially in areas such as petroleum bunkering, mineral exports, port operations, goods transit, warehousing and free zone operations.

Resource mobilisation for 2022

During his presentation of the 2022 Budget Statement and Economic Policy, Ofori-Atta said the government expects total revenue for next year to increase by 20% of GDP, against 16% of GDP for 2021.

“Total revenue and grants for 2022 is projected to rise to GHC100.5 billion, equivalent to 20.0% of GDP, up from a projected outturn of GHC70.3 billion, equivalent to 16% of GDP for 2021.

“Domestic revenue is estimated at GHC99.5 billion and represents an annual growth of 44% over the projected outturn for 2021,” he said. 

Nicholas Brown

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