Accra, Feb. 11, GNA – A forum organized by the Economic Governance Platform and Advocates for Christ Ghana has called on government to address fundamental issues that go beyond the implementation of the E-levy or gaining support from the International Monetary Fund (IMF).
A communique issued at the end of the forum by the two organisations and copied to the Ghana News Agency said: “Going to the IMF is not a sustainable solution in the long-term.”
The forum was on the theme: “E-Levy, IMF or What? Sustainable Solutions to Ghana’s Debt Crisis.”
The communique said the way forward for the country in overcoming its financial difficulties was to ensure innovative and sustainable way of mobilising revenue, plug the current leakages in revenue mobilisation and ensure efficiency in public spending.
The rest were to ensure progressive and equitable tax structure, improve compliance and efficiency in existing tax handles, deal with corruption and fiscal consolidation, be mindful of the poor, policies should capture medium to long-term fiscal path and deal with the perceived lack of credibility.
The communique said Ghana’s debt accumulation was on the rise and there had been growing concerns by politicians, academics, investors, entrepreneurs, civil societies and the international community.
“Ghana’s growing debt stock is occurring at the back of rising public expenditure and persistent weak revenue mobilization. This has undermined Ghana’s fiscal stance and debt sustainability in recent years and the current trajectory of the economic state of affairs is not in Ghana’s favour,” it stated.
It said consequently, the quest to address this debt albatross, aimed at reversing fiscal deterioration and putting the public debt on a sustainable path has led to proposed solutions emerging from different quarters of the society.
“One such proposed solution is the introduction of an electronic transactions levy by the government, aimed at mobilising additional revenue to meet Ghana’s growing public expenditure and widening the tight fiscal space.
The communique said as part of the justification for the adoption of the e-levy in the ongoing discourse, it was believed that the implementation of the levy would prevent Ghana from going back to the IMF among others.
“This has led to many unanswered questions in the minds of many. Is e-levy the cornerstone to revenue mobilisation? Is e-levy Ghana’s salvation? What is the IMF’s role in Ghana’s search for a solution to its debt crisis? Is it time for a divorce from the IMF?
The communique said the discussion at the forum highlighted Ghana’s external debt, which stands at GHc344 billion out of which GHc179.401 billion and 165.108 billion are domestic debts and external debts respectively.
“The key factors that have accounted for the rise in debt from the perspective of government is the financial clean-up exercise, exchange rate depreciation and the energy sector crisis. In addition, the loans and support that were contracted during the COVID pandemic accounted for the rise in the public debt stock,” it stated.
It said the fiscal situation in the economy had left government with no option than to look in-ward to address the current debt crisis through domestic revenue mobilisation.
At the forum, it was argued that the adoption of the e-levy would prevent Ghana from going to the IMF, which comes with conditionalities, and that implementation of the levy jobs would be created, and the debt stock would reduce.
“E-levy is going to address three key things: unemployment, increase in infrastructure and reduce the current level of the debt stock, and will make Ghana to become responsible for its own progress and development.”
Making augment against the adoption, the forum said the economy was already struggling and the e-levy would compound the problem and that Government should consider other tax options that were more sustainable (such as property tax, taxing the informal sector, dealing with inefficiencies in the tax system, inefficiencies in tax exemption and dealing with illicit financial inflows.)
“The e-levy will amount to multiple taxation, it has economic implication such as reducing financial inclusion, and undermining the cashless economy and it is tax discriminatory (does not meet the conditions of far tax,) the communique said.
Besides, whether the e-levy should be passed or not, the fiscal stance of the economy stipulates that the government may have to resort to the IMF for a bail out as it has done previously following fiscal crisis.
The communique said the augment for going for the IMF bailout would ensure fiscal discipline/fiscal consolidation reflecting expenditure restraint and revenue enhancement, macroeconomic stability, policy credibility/investor confidence, shore up confidence in the economy and periodic programme review to put government on its toes.
The argument against the bailout is that IMF and austerity are inseparable with implications for poverty and inequality, IMF is already advising developing countries to pursue steep austerity amid inequality worsening pandemic.
The forum further stated that going to the IMF typifies Ghana’s incapability in managing its affairs after so many years of independence, and social and economic consequences for the going to the IMF.
Present at the forum were the Deputy Minister of Finance, Dr J.hn A. Kumah, who spoke on the topic: “E-Levy: A Cornerstone of Domestic Revenue Mobilization”, Professor Godfred Charles Ackah, Economist and Associate Professor of Economics at the Institute of Statistical, Social, and Economic Research (ISSER), made a presentation on “E-Levy: Not the Way to Salvation.”
The rest were Professor Godfred A. Bokpin, Economist and Professor of Finance, University of Ghana, made a presentation on “Ghana’s Apparent Marriage to the IMF, Time for a Divorce?, and Dr Albert Touna Mama, IMF country Representative, who also spoke on “Ghana’s Crisis: What’s the role of the IMF.”
GNA