Business News of Monday, 15 March 2021
Source: 3 News
The Government of Ghana has been told to account for the disbursement made to the country by the International Monetary Fund (IMF) to deal with the effect of the coronavirus before introducing new taxes.
On April 13, 2020, the IMF Executive Board approved the disbursement of US$1 billion to be drawn under the Rapid Credit Facility after the Bretton Woods institution said the COVID-19 pandemic was already impacting Ghana severely.
The IMF further noted that growth was slowing down, financial conditions had tightened, and the exchange rate was under pressure.
“The authorities have timely and proactively responded to contain the spread of the COVID-19 pandemic in Ghana and support affected households and firms.
“The Executive Board of the International Monetary Fund (IMF) today approved the disbursement of SDR 738 million (about US$1 billion) to be drawn under the Rapid Credit Facility (RCF). The disbursement will help address the urgent fiscal and balance of payments needs that Ghana is facing, improve confidence, and catalyze support from other development partners.
“The COVID-19 pandemic is already impacting Ghana severely. Growth is slowing down, financial conditions have tightened, and the exchange rate is under pressure. This has resulted in large government and external financing needs. The authorities have timely and proactively responded to contain the spread of the COVID-19 pandemic in Ghana and support affected households and firms.
“The IMF continues to monitor Ghana’s situation closely and stands ready to provide policy advice and further support as needed,” the IMF said.
“The authorities’ response has been timely, targeted, and proactive, focused on increasing health and social spending to support affected households and firms. The Central Bank has recently taken steps to ensure adequate liquidity, preserve financial stability, and mitigate the economic impact of the pandemic, while allowing for exchange rate flexibility to preserve external buffers.
“The uncertain dynamics of the pandemic creates significant risks to the macroeconomic outlook. Ghana continues to be classified at high risk of debt distress. The authorities remain committed to policies consistent with strong growth, rapid poverty reduction, and macroeconomic stability over the medium-term,” it added.
In spite of this support given to the country, the government is proposing in the 2021 budget statement the introduction of a Covid-19 Health Levy of a one percentage point increase in the National Health Insurance Levy and a one percentage point increase in the VAT Flat Rate to support expenditures related to Covid-19.
“To provide the requisite resources to address these challenges and fund these activities, government is proposing the introduction of a Covid-19 Health Levy of a one percentage point increase in the National Health Insurance Levy and a one percentage point increase in the VAT Flat Rate to support expenditures related to Covid-19,” the budget said.
But the Executive Director of the Media Foundation for West Africa, (MFWA) Sulemana Braimah, has said in reaction to the new taxes that the government must first of all account for the funds it received from the IMF.
“COVID-19 tax? Account for this and the many more loans and aid first,” he said in a tweet.
He further noted that while other countries are giving Covid Tax Reliefs to enable the citizens cope with the ravages of the coronavirus pandemic, Ghana is rather imposing a COVID-19 Relief Tax on its people.
In a separate tweet, Mr Braimah said “While other countries are giving Covid Tax Reliefs, Ghana is imposing a Covid Relief Tax.”
He added “Instead of reducing corruption, you are imposing more taxes on the people and fighting out those who fight to protect the public purse. Just 10% corruption reduction will be fine.”
Member of Parliament for North Tongu, Samuel Okudzeto Ablakwa has asked the government not to tax the people of this country in this difficult period of the coronavirus pandemic.
Mr Ablakwa said, “Don’t squeeze out additional taxes from the people in these tough times only to fund government propaganda as a flagship programme.”
Meanwhile, Member of Parliament for Sekondi Andrew Egyapa Mercer has said the new taxes introduced in the 20201 budget are targeted at solving specific problems.
He said the problems facing the country at the moment do not permit the government to borrow rather introduced taxes to deal with the specific challenges.
His comments come after Lawmaker for Tamale North, Alhasan Sayibu Suhuyini has said the 2021 budget statement presented by leader of government business Osei Kyei Mensah Bonsu will worsen the condition of businesses in the country.
He said at a time Ghanaians and businesses are dealing with the negative impact of the coronavirus, the government has introduced taxes to, in his view, worsen their plight.
“The government introduced burdensome taxes on some companies already overburdened by COVID,” he said on the Key Points on TV3 Saturday, March 13.
He added “There is the tax on sanitation that we are going to deal with. There is also the Covid levy for us to pay.
“How much more can one be insensitive? As a people, we have already paid for Covid by the loved ones lost and by businesses that have been lost.”
But Mr Mercer said on the same show that “The taxes introduced are essentially directed to solve specific problems,” he said.