By The International Monetary Fund (IMF) has expressed its readiness to explore alternative approaches to address Ghana’s revenue deficit resulting from the suspension of the Value-Added Tax (VAT) on electricity.
Acknowledging the raised concerns about the tax’s implementation and its potential impact on households and businesses, the IMF emphasized its responsiveness to public sentiments regarding this matter.
Responding to a query from Vivian Kai Lokko of Citi TV/Citi FM during a gathering with a select group of journalists while visiting Ghana, IMF Managing Director Kristalina Georgieva affirmed the Fund’s commitment to working collaboratively towards finding a mutually advantageous solution to address the debt gap and fortify economic progress.
Georgieva further mentioned ongoing discussions with Ghanaian authorities to identify favorable policy alternatives aimed at reducing debt levels and reinforcing macroeconomic achievements.
“We understand that the people in Ghana have been impacted and for the low-income household, any additional cost is a problem that is very difficult to bear. We have to look at the objective of getting strength in the fiscal position of the government. There are different measures that we can adopt to achieve this.”
In February, the Government of Ghana formally halted the proposed implementation of the 15 percent Value Added Tax (VAT) on the local consumption of electricity. This decision followed instructions from the Ministry of Finance directing both the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to suspend the imposition of the levy. The aim was to facilitate comprehensive discussions with industry stakeholders and labor unions.
The Ministry of Finance stated that the suspension was also to engage in further talks with the International Monetary Fund (IMF), as the VAT on electricity constituted a crucial element of Ghana’s post-COVID-19 program for Economic Recovery.
“So we are still discussing but government needs to look within on how to achieve this to ensure the debt and fiscal sustainability. So our team will help in this regard to achieve it”, Kristalina Georgieva added.
