The government has announced it will not introduce new taxes or supplementary expenditure in the review of the 2024 budget presented to Parliament today. Instead, efforts will be directed towards optimizing the tax regime to enhance compliance and boost domestic revenue.
Dr. Alex Ampaabeng, Deputy Finance Minister, made this clear during the launch of the World Bank’s eighth Ghana Economic Update in Accra on Monday, July 22. He hinted at a potential reduction in government expenditure.
The report, titled “Strengthening Domestic Revenue Systems for Fiscal Sustainability,” addresses medium-term economic prospects and risks. It also offers solutions for better macroeconomic management and aims to stimulate dialogue among stakeholders on economic issues and policy decisions.
“The mid-year budget is not bringing any new taxes, and there will not be supplementary budget… in fact, our expenditure, without pre-empting anything, is likely to be revised downwards,” Dr. Ampaabeng stated.
He emphasized the need to support businesses within the current economic climate and reaffirmed the government’s commitment to protecting the economy by adopting a sustainable fiscal path. This, he said, would help make Ghana a preferred trade and investment destination in Africa.
Dr. Ampaabeng mentioned ongoing efforts by the Ministry of Finance and the Ghana Revenue Authority (GRA) to clean up data, identify taxpayers, and ensure they pay the appropriate taxes. “With the digitisation of addresses and linking the Ghana card with bank accounts and businesses, it’s much easier to access taxpayers,” he noted.
Experts have urged the government to streamline tax and revenue systems and fully implement policies under the ongoing $3 billion International Monetary Fund (IMF) loan-supported programme. Various sectors, including trade, industry, academia, and the diplomatic corps, have called for long-term solutions to stabilize Ghana’s economy, such as improving revenue collection efficiency and capping government borrowings.
Stefano Curto, Lead Economist for Ghana, Liberia, and Sierra Leone at the World Bank, noted that Ghana’s macroeconomic situation had improved significantly over the past year. However, he stressed the importance of enhancing tax revenue while minimizing the impact on growth and the poor.
In an interview with the Ghana News Agency, Abeku Gyan-Quansah, Director of Tax Services at PricewaterhouseCoopers, emphasized the need for effective implementation of tax laws and making payment processes more business-friendly. He criticized the complexity of the Value Added Tax (VAT) system, which has six different rates, and called for urgent reforms to increase compliance.
Dr. Nii Kwaku Sowa, Economist and Country Director of the International Growth Centre (IGC-Ghana), called for the streamlining of tax exemptions and retention policies, particularly in the mining and construction sectors, to benefit the country.
At a government engagement with the international community and trade and industry leaders in May 2024, Irchad Razaaly, the European Union Ambassador to Ghana, urged the government to improve the business climate, expressing the EU’s readiness to support local value addition initiatives.
Dr. Mohammed Amin Adam, the Finance Minister, will present the mid-year budget review to Parliament, his first since assuming office in February 2024. The review will provide updates on the implementation of the 2024 budget, including economic and fiscal performance for the first half of the year. It will also outline budget plans for the remainder of the year and review policies aimed at fostering growth, particularly for Small and Medium-sized Enterprises (SMEs).
Additionally, the review will update Parliament on the implementation of the $3 billion IMF-supported Post Covid-19 Programme for Economic Growth (PC-PEG), a homegrown policy designed to restore macroeconomic stability, achieve debt sustainability, and ensure inclusive growth in response to the recent economic crisis.
