Three modified laws have been presented to Parliament by the administration as part of efforts to improve domestic revenue mobilisation.
When passed, the Growth and Sustainability Amendment Bill, Excise Duty Amendment Bill, and Income Tax Amendment Bill will bring in around GH¢4 billion yearly.
The Daily Graphic was informed by a high-ranking source at the Ministry of Finance that the Income Tax Amendment Bill, which is anticipated to raise GH1.2 billion, would continue to exempt people who make the minimum wage from paying taxes.
Nonetheless, it stated that if passed into law, the plan will affect how foreign exchange losses are reported in financial accounts.
The source continued by saying that a 20% tax on fruit drinks and e-cigarettes would bring in an additional GH400 million for the Excise Duty Amendment Bill.
It also stated that the National Fiscal Stabilization Levy, which is now imposed on businesses engaged in certain industries, including telecommunications, mining and extractives, and breweries, would be replaced by the Growth and Sustainability Amendment Bill.
When it becomes law, the act, which will have a sunset clause, is expected to rake in about GH¢2.2 billion, the source said.
Daily Graphic checks indicate that the passage of the amended bills was supposed to have been done together with the Appropriation Bill, but their passage has been delayed.
IMF deal
The three major revenue measures are critical towards securing the approval of the International Monetary Fund (IMF) Board for the country’s $3 billion bailout deal.
Although Ghana was not discussed during the IMF Board meeting yesterday, the authorities are hopeful the country will be on the agenda shortly after, once certain critical actions are completed.
Most critical of the actions was the passage of the outstanding domestic revenue measures, the source said.
However, a Deputy Minister of Finance, Dr John Kumah, told the Daily Graphic that as the first quarter of the year drew to an end, an assessment of Ghana’s progress towards approval by the IMF Board showed that significant progress had been made, with the board approval likely to happen sooner than later.
He said the government set for itself March this year to secure the IMF deal to support the challenged economy.
The ambitious deadline, according to him, was to ensure that the necessary attention and urgent treatment were given to all actions that must be taken towards key milestones the country must achieve before securing the IMF board approval for the IMF-backed programme.
The key prior actions and milestones include the restructuring of the country’s local and external debts, with the Ministry of Finance reporting that strong progress has been made, with a positive outlook for speedy completion.
The government has completed the Domestic Debt Restructuring Programme (DDEP) to replace bonds of high yields with low-yielding ones to ensure debt sustainability.
The next step, within the country, is for Parliament to pass the three amendment bills, which are part of the revenue measures and prior actions.
“It is, therefore, critical for Parliament to pass these three revenue measures to enable Ghana’s programme to be laid before the IMF Board for approval,” Dr Kumah said.
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External debt
The focus is now on restructuring the country’s external debts, with the government having submitted the requisite documentation and awaiting the formation of the creditor committee by the Paris Club.
It has also started engagements with China, which holds about $1.7 billion of Ghana’s debt.
As part of the debt treatment operations, the government is interacting regularly with all its creditors, including China.
A source familiar with the process explained that at this stage, the focus of the government was to work towards a board approval, which required only financing assurances, and not the fine details of the debt treatment operations that might have to be implemented.
Delegation
As part of engaging the country’s external creditors, the Minister of Finance, Ken Ofori-Atta, was in the Ethiopian capital, Addis Ababa, for the United Nations Economic Commission for Africa (UNECA) High-Level Working Group on the Global Financial Architecture.
The minister met with the Paris Club on the sidelines of the 55th session of the ECA, which started last Wednesday and ends today.
Tomorrow, the Finance Minister will lead a government delegation to Beijing, China, for high-level bilateral discussions on Ghana’s debt treatment.
The discussions, which are expected to last until Friday, are also aimed at securing further financing assurances from China.
This is a reciprocal engagement following a visit to the country by a delegation of the China EXIM Bank. It also called on the Finance Minister a couple of weeks ago.
The Ghana delegation, which includes high-level officials, as well as technical teams, from the Ministry of Finance and the Ministry of Foreign Affairs, will meet with representatives of the Chinese government and their counterparts from China’s ministries of Finance and Foreign Affairs.
The team will update the Chinese government on the ongoing restructuring process.
Context
Ghana and China have a strong relationship, based on a Friendship Treaty dating back to 1961, through which China has played a critical role in financing the country’s infrastructure.
China is Ghana’s largest bilateral trading partner. The Asian and global giant also has very huge foreign direct investments in the country.
More recently, China chose Ghana as the first country in Africa to receive its anti-pandemic supplies.
Diligence
The next step in Ghana’s IMF pathway is to have the board to endorse the programme.
Dr Kumah explained that the country had been very diligent in its interactions with the IMF since it started to work on a programme in July last year.
Ghana reached a staff-level agreement with the IMF on December 12, last year, less than six months after the start of work on the programme.
“This is a strong achievement that shows rapid progress and great cooperation and also firms up the commitment of the IMF to support Ghana for up to $3 billion over four years,” Dr Kumah added.
