Gabby laments the ineffectiveness of the government’s efforts to increase revenue

Gabby weighs the option of IMF bailout for Ghana

Leading Member of the ruling New Patriotic Party, Gabby Otchere-Darko, has bemoaned the failure of measures put in place by the government to raise revenue for Ghana.

In a series of tweets shared on social media, he has spoken about the current economic situation in Ghana.

He posits that despite the huge expectations that birthed the idea of imposing a 1.5% levy on electronic transfers, the government has been able to realise only 10% of its expected revenue from the controversial E-Levy.

“After 5 months of stalemate and bashing, the e-levy, after implementation, is delivering only 10% of estimated revenues; our revenues remain very low as compared to the rest of the world; debt levels dangerously high, cedi, like most currencies, struggling against the US dollar,” he said.

According to him, the 10% revenue generated from the E-Levy translates to an amount, which is less than GH¢60 million out of the GH¢600million that the government expected to realise from the policy since it came into effect on May 1, 2022.

“Our economy is growing faster than most countries around the world. But, that alone can’t save us as confidence in our ability to service our debts is lowering. We can’t continue to use all the little revenues raised to pay our debts. Very soon we may have to borrow to pay wages!

“What options are open to government? The question should rather be: what option, if adopted, will re-inject investor confidence in our economy? Even if we find the $3-5 billion required, will that help? E-levy which was to have given us some 600m by now has done less than 60m,” he indicated.

He further pointed out that despite several concerns coming out of the recent rise in food prices, the country is not experiencing a food crisis.

“Ghana has no food crisis, enough food from our farms, yet food prices have shot up 3-4 times more in our cities, far & over above rising cost of transportation. To make matters worse, global food insecurity is worsening as inflation, from challenges with supply chain, worsens,” the NPP stalwart said.

Gabby Otchere-Darko emphasized that a bailout from the International Monetary Fund might not be the best choice for Ghana’s struggling economy even though he noted that he is not fundamentally opposed to an IMF program.

He, however, pointed out that an IMF bailout may as well be one of the limited options available to the government under the circumstance.

Read his full tweets below:

After 5 months of stalemate and bashing, the e-levy, after implementation, is delivering only 10% of estimated revenues; our revenues remain very low as compared to the rest of the world; debt levels dangerously high, cedi, like most currencies, struggling against the US dollar Ghana has no food crisis, enough food from our farms, yet food prices have shot up 3-4 times more in our cities, far & over above rising cost of transportation. To make matters worse, global food insecurity is worsening as inflation, from challenges with supply chain, worsens.

Our economy is growing faster than most countries around the world. But, that alone can’t save us as confidence in our ability to service our debts is lowering. We can’t continue to use all the little revenues raised to pay our debts. Very soon we may have to borrow to pay wages!

What options are open to government? The question should rather be: what option, if adopted, will re-inject investor confidence in our economy? Even if we find the $3-5 billion required, will that help? E-levy which was to have given us some 600m by now has done less than 60m.

There’s, understandably, a national aversion to an IMF program, because of the history of conditionalities which attack sacred cows like jobs and social interventions. Akufo-Addo will not sacrifice free SHS and other critical welfare policies to help the poor for any assistance.

Yes our revenue to GDP ratio is among the lowest in the world (even in Africa!); but with the current global hardships, and cost of living rising everywhere in the world, a decision by any govt to intensify taxation measures especially for workers may not be too clever.

Ghana is a member of the IMF. The world is in serious crisis. Ours is not helped by our high debt and low income levels. With the economy still growing, but investor confidence low, govt being compelled to cut down capital expenditures will eventually lead to job losses unless we do something that will inject confidence in our capacity to ride this heavy storm and that something should happen pretty quickly. Are you against an IMF program?

I am not for an IMF program that throws peanuts at us but imposes conditions that will end up hurting the poor, jobs and businesses more. Covid-19 and War in Ukraine are not of Africa’s doing but more to our doom. A program that pretends it is all our doing is doomed to fail.

Am I against an IMF program in principle? No.