Gov’t intending to leverage E-Levy revenue for more loans – Dr. Peprah
Chief Finance Officer of Valley View University, Dr. Williams Peprah, has disclosed that government intends to collateralize the expected ¢7 billion e-levy revenue to borrow in advance from international institutions to finance some of its projects.
According to him, government wants the E-Levy to be passed so it can securitise the proceeds for loans.
He, however, added that the E-levy is not going to resolve the fiscal challenges facing the country.
“What government intends to do is to leverage the E-Levy revenue to go and borrow in advance and use it as collateral – repayment strategy – to investors. As you are aware, government cannot go directly to the capital market, but government can go to other institutions that can give concessionary loans and then government can use the E-levy to service the loan.”
“We know that this has been done in the past. Our road toll levy was used in such instance. Currently, the GETFund…a certain portion has also been used to get inflows into the country for development projects, and government is using the GETfund revenue to service those loans”, he added.
He argued again that investors want to see government demonstrate the ability to raise the revenue, a reason government is bent on getting Parliamentary approval for the E-Levy.
“It is not only about the ¢7.0 billion tax revenue from the E-Levy within a year, but it gives government the leverage to be able to go out and get other investors to give them more money and then they [government] will use the E-Levy revenue as a repayment plan. In fact, if every investor knows very well about this revenue from E-Levy, it is very easy to raise funds”
“That is why government is eager to make sure that the E-Levy is passed and then they [government] will get the ¢7.0 billion and also additional loans can be raised on the back of the e-levy”, Dr. Peprah emphasised.
“Normally, in finance this is what we call securitisation and so this is what the government is trying to do. So that is why we see the E-Levy is more important to the government”, he concluded.
Meanwhile, Finance Minister, Ken Ofori Atta has called on Ghanaians to join hands in becoming masters of their own destiny by helping government to close the revenue gap in the annual budgets.
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Government has proposed a 1.75% levy on all electronic transfers to help reduce the country’s debts, while enabling it fund the growing demands of the Ghanaian people.
However, the E-levy has become a subject of public debate following the Minority NDC’s efforts to kick against it in Parliament.
But government officials who have been touring the country on town hall meetings say it is a way to raise revenue to help develop infrastructure, jobs and social interventions.
At the second townhall meeting at the Sekondi Takoradi Youth Hall on Wednesday February, 2, 2022, the Finance Minister argued that the time has come for Ghanaians to step up their contribution to settle all outstanding demands.
He explained that as a sovereign country, it is important for Ghana to be the master of its own destiny by mobilising more local resources to pay for the things it demands.
He said the days when Ghana looked to international partners for a bailout or fund its development agenda are over.
“We are the ones who have to mobilise our own resources to fund the development we want. Our sovereignty and dignity requires that we look inward and see how to pay up and make the Ghanaian vision a reality”, he said.
Responding to calls for government to forget the revenue effort and resort to the IMF for a bailout, MP for Sekondi and Deputy Energy Minister, Andrew Agyapa Mercer said an IMF bailout is an additional loan that will further deepen Ghana’s debt challenges and at the same time add restrictions to government’s spending in critical sectors of the economy.
He said the IMF bailout proposal being touted is not the answer to Ghana’s challenges.
He therefore called on Ghanaians to support the e-levy in order to make the dreams of Ghanaians a reality.
