The Ministry of Finance has said the approval of a requested bailout from the International Monetary Fund will not lead to a cessation of the Electronic Transfers Levy (E-Levy).
The government of Ghana on July 1, 2022, contacted the IMF to commence talks for a bailout after initially rejecting calls to approach the fund for support.
For months, the current government of Ghana fought hard to approve and implement a 1.5% levy on electronic transactions.
Among several arguments, the government said the E-Levy is a direct and appropriate substitute for a possible bailout from the International Monetary Fund in the face of growing economic challenges.
Following the government’s decision to finally approach the IMF, some critics have called for the cancellation of the E-Levy implementation which has so far achieved just 10% of its intended target after two months.
But in a document answering some questions about what will become Ghana’s 17th IMF bailout, the ministry of finance said it will not lead to the scrapping of the E-Levy.
According to the ministry, the government remains committed to ensuring the full operationalisation of the E-Levy as a means of generating revenue to support expenditure.
“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,” the ministry said in its document.
Meanwhile, a team from the IMF is expected to arrive in the country to begin negotiations with the government.
Read the Finance Ministry’s FAQ on the IMF bailout below:
