The International Monetary Fund (IMF) has expressed its openness to exploring alternative measures to address Ghana’s revenue deficit following the temporary suspension of the Value-Added Tax (VAT) on electricity.
Acknowledging concerns raised about the tax’s implementation and its potential impact on households and businesses, the IMF underscores its responsiveness to public sentiment on the matter.
During a meeting with selected journalists in Ghana, IMF Managing Director Kristalina Georgieva, responding to a question from Vivian Kai Lokko of Citi TV/Citi FM, assured of the IMF’s commitment to collaborative efforts aimed at finding a mutually beneficial solution to narrow the debt gap and uphold economic progress.
Georgieva emphasized ongoing engagements with Ghanaian authorities to identify favorable policy options that reduce debt levels and reinforce macroeconomic achievements.
“We understand that the people in Ghana have been impacted and for the low-income household, any additional cost is a problem that is very difficult to bear. We have to look at the objective of getting strength in the fiscal position of the government. There are different measures that we can adopt to achieve this.”
In February, the Government of Ghana officially suspended the proposed 15 percent VAT on domestic electricity consumption.
This decision followed the Ministry of Finance’s directive to the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to halt the levy’s implementation for extensive consultations with industry stakeholders and labor unions.
The Ministry of Finance explained that the suspension aimed to facilitate further discussions with the IMF, as the VAT on electricity played a critical role in Ghana’s post-COVID-19 Economic Recovery Program.
Georgieva reiterated the ongoing dialogue, highlighting the government’s need to internally strategize on achieving debt and fiscal sustainability. She assured that the IMF team would support these efforts to ensure a successful outcome.
