Ghana returns to gold top spot as output jumps 32%

By Patrick Paintsil

nation’s aggressive industrial drive.

“The [IMF] programme’s e ort to increase government revenue mobilization relies unduly on taxes; an overreliance on taxes, however, is certain to hurt businesses and industries, and ultimately harm the competitiveness of the economy and its long-term growth potential,” senior research fellow and acting executive director of the institute, Dr. Said Boakye said at a press conference in Accra.

The 2023 budget has seen the introduction of several new taxes as a prior action for the approval of the IMF bailout programme, with more taxes anticipated under the government’s tax-centered revenue strategy.

“Although the country’s public revenue generation is low and must be expanded, a tax-centered approach is not the way to go,” Dr. Boakye reiterated.

Private sector businesses are currently overburdened with taxes amid surging in ation, an unstable foreign exchange regime and high utility tari s but the IMF programme recom- mends further taxes, an action that the IFS opines could undermine its growth.

Despite consenting to most of the scal reforms that are prescribed under the programme, given the severity of the economic malaise, the scal policy think tank opined that excessive taxation coupled with other ‘unfavourable’ measures proposed by the programme could do the economy more harm than good.

Another harmful suggestion, according to the IFS, is the plan to adjust fuel levies in line with in ation and exchange rate changes to raise more revenue given the direct in uence of such an action on the economy.

“Adjusting fuel levies in line with in ation will raise fuel prices and feed back into in ation thereby creating a vicious cycle of higher fuel prices and worsening in ation.

These two [over-taxing and tying fuel adjust- ments to in ation or exchange rates] would be too high a macroeconomic price to pay in a bid to increase revenue,” the IFS further argued.

Ghana’s three-year extended credit facility-supported programme with the IMF seeks to restore macroeconomic stability and debt sustainability whilst laying the foundations for higher and inclusive growth.

This is to be achieved on the ve pillars of lasting scal adjustments, tight monetary and exchange rate policies, structural reforms on debt sustainability, strengthened nancial sector stability and reforms that support inclusive economic growth.

The IFS further advised the government against implementing its growth-oriented programmes at the expense of strong scal consolidation, which is needed to restore macroeconomic stability.