IMF bailout: Government won’t terminate E-Levy, says Finance Ministry

The Finance Ministry said other tax measures could be considered by the government for the medium-term amid the International Monetary Fund (IMF) programme

The government will not terminate the Electronic Transfer levy [E-Levy] because of its decision to engage the International Monetary Fund (IMF) for a bailout, the Finance Ministry has said.

According to the Finance Ministry the proceeds from the E-Levy will help to shore up the country’s economic fortunes amid the IMF support.

Answering the question of whether the E-Levy will be terminated, the Finance Ministry in a Frequently Asked Questions (FAQs) 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%.

“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, a team from the International Monetary Fund will arrive in Ghana on Wednesday 6 July 2022 to commence negotiations with the government on the modalities for a package to support Ghana’s economy.

Ghana’s decision to opt for an IMF programme has been greeted with mixed reactions, with concern about what it may mean for public sector jobs and social programmes.

On 1 July 2022, President Akufo-Addo authorised the Minister for Finance, Ken Ofori-Atta, to commence formal engagements with the International Monetary Fund (IMF).

A statement signed by the Information Minister, Kojo Oppong Nkrumah, said the president’s directive to the Finance Minister followed a telephone conservation between President Akufo-Addo and the IMF managing director, Kristalina Georgieva, conveying Ghana’s decision to engage with the Fund.

“The engagement with the IMF will seek to provide balance-of-payments support as part of a broader effort to quicken Ghana’s build-back in the face of challenges induced by the COVID-19 pandemic and, recently, the Russia-Ukraine crises,” the statement read.

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