IMF signals readiness to explore revenue alternatives amid Ghana’s VAT suspension on electricity
The International Monetary Fund (IMF) has expressed a willingness to explore alternative strategies in addressing Ghana’s revenue deficit following the suspension of the Value-Added Tax (VAT) on electricity.
In response to concerns raised over the implementation of the tax and its potential impact on households and businesses, the IMF emphasized its sensitivity to public sentiments on the matter.
During an engagement with journalists, IMF Managing Director Kristalina Georgieva assured of collaborative efforts aimed at finding a mutually beneficial resolution to narrow the debt gap and fortify economic advancement.
Ms Georgieva emphasized the IMF’s ongoing dialogue with Ghanaian authorities to identify favorable policy options geared towards reducing debt levels and bolstering macroeconomic achievements.
“We recognize the implications for the people of Ghana, particularly low-income households, for whom any additional cost presents significant challenges. Our objective is to strike a balance between enhancing the government’s fiscal position and alleviating burdens on citizens. There are various avenues we can explore to achieve this objective,” she remarked.
The Government of Ghana officially suspended the planned 15 percent VAT on domestic electricity consumption in February, following directives from the Ministry of Finance. This decision aimed to facilitate extensive consultations with industry stakeholders and labor unions.
The Ministry of Finance highlighted that the suspension was intended to pave the way for further discussions with the IMF, as the VAT on electricity formed a critical component of Ghana’s post-COVID-19 Economic Recovery program.
Ms Georgieva reiterated the ongoing deliberations, emphasizing the government’s internal exploration of options to ensure debt and fiscal sustainability. She reaffirmed the IMF’s dedication to supporting this endeavor.
