Ofori-Atta: Democratic lapses affecting Ghana’s performance on international market

The Minister for Finance says the country must feel remorse about unfortunate incidents which characterised proceedings in Parliament on adoption of the Budget

The Minister for Finance, Ken Ofori-Atta, says Ghana’s performance on the international capital market is being undermined by certain lapses in democratic governance.

He said the brawl in Parliament at the end of last year over the debate on the 2022 Budget and its component introducing the Electronic Transactions Levy had lowered investor confidence and made going to the international market very expensive.

“Spreads have widened on the international market, such that if one was going to the market if there was space, you would be paying about 500 basis points,” Ofori-Atta said.

Speaking at a media briefing on Tuesday, he said it was important for citizens to manage altercations in a hung parliament, feel remorse for the unfortunate incidents which characterised adoption of the Budget and build consensus towards growing Ghana.

“We look forward to joining hands with our honourable Members of Parliament to approve the E-Levy on a consensus basis so we can collectively address the big issues of unemployment, debt sustainability and infrastructure build-up,” he said.

Share the burden

Following a report by the Bloomberg news agency on Ghana’s debt situation and the downgrade by Fitch of Ghana’s long-term foreign-currency issuer default rating from B to B- with a negative outlook, the E-Levy, the Finance Minister said, was a well-thought-out mechanism to rope in almost everyone to share the burden of contributing towards making standards of living much better for all.

Highlighting the imbalance in burden-sharing, he noted that Greater Accra has been responsible for 90% of all revenue mobilised. However, it is also where 60,000 professionals do not pay direct taxes, and property tax is almost non-existent.

“The most efficient way [to mobilise revenue] must take into consideration technology and the structural changes in the tax handles,” Ofori-Atta said.

“The fact is that we have over 40.5 million mobile phone subscribers and over 17.1 million active mobile money subscribers. It is instructive to note that the total value of transactions on mobile money grew by a CAGR [compound annual growth rate] of 65% between 2016 and 2021, rising from GHC78.5 billion in 2016 to an estimated GHC953.2 billion in 2021,” he said.

Targeting strategy

Ofori-Atta argued that Ghana’s inability to share the cost burden more evenly and to generate sufficient revenue to serve the national need had affected the growth of the country negatively compared to that of its neighbours in the West African sub-region.

“We have invested less in infrastructure. Between 1961 to 2020, Ghana’s average gross fixed capital formation ratio was 17%, compared to 25% in sub-Saharan Africa.

“Moreover, between 2017 and now, our tax-to-GDP has hovered between 11% and 13%, compared to our peers, who are between 16% and 20%.”

Ofori-Atta reiterated the government’s commitment to implementing a coherent strategy that will give opportunities to all Ghanaians by increasing resource mobilisation, managing expenditure prudently, creating jobs and offering skills training.

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