Government forcing E-levy on Ghanaians to avoid going to IMF – ASEPA

Alliance for Social Equity and Public Accountability (ASEPA) has warned that Ghana’s economy could crumble soon as the country’s debt level hits an all-time high.

The Executive Director for ASEPA, Mensah Thompson, who revealed this to Prince Minkah on Dwaboase Wednesday morning on TV XYZ stated that bond holders were no longer interested in supporting Ghana financially.

He said it was for that reason that the government, through the Finance Minister, Ken Ofori-Atta, announced an electronic levy during the presentation of the 2022 budget at the latter part of 2021.

“They know that when the E-levy is passed, they will not be able to get the expected 7 billion. They know mobile money (Momo) users will decline but still want to pass it through our throats to be able to get loans,” Thompson said.

“When they pass the E-levy, they can bank their hopes on it on the bond market and take loans. They can now tell bondholders that we will get 7 billion from E-levy so give us loans and we will use that as a collateral, ” Thompson explained.

Warnings

Experts have been warning of an imminent collapse of the country’s economy when pragmatic measures are not put in place.

Among those predicting doom is an economist with the University of Ghana Business School (UGBS), Prof. Godfred Bokpin.

Prof. Bokpin told Joy News that the current debt situation could get worse by the end of September, if proper interventions are not implemented.

“When you see the proportion of the debt payment, relative to the size of the revenue envelope and you look at your rising debt and you look at the rate of economic growth and the drivers of that growth, you can reasonably predict that it’s just a matter of time that the economy will just collapse. We’re probably going to run into a little bit more difficulties towards the end of September,” he said.

Following Ghana’s downgrade to ‘B-‘ from ‘B by credit rating agency, Fitch, another economist who is also the Dean of the Business School at the University of Cape Coast (UCC), Professor John Gatsi said the economy is not in good shape.

“I think we are not surprised about the downgrade because the fiscal indicators are very clear. We do know that for some time now our interest payments, as a ratio of tax revenue, have been going up significantly. In 2021, the interest payment of about 32.5billion cedis as a ratio of what has been put up by GRA of about 57.3 billion…That gives you around 47 percent and you add that of compensation and expenditure on infrastructure, you are going around 127per cent of the revenue and so all these indicators are very clear to us,” Prof Gatsi said in an interview with TV3.

“You will recall that second half of last year the signals were there but we have not been able to do anything that will actually give that confidence.”

The downgrade of Ghana’s IDRs and Negative Outlook reflect the sovereign’s loss of access to international capital markets in 2H21, following a pandemic-related surge in government debt.

Government Reaction

Meanwhile, the Ministry of Finance In a statement debunked some claims suggesting that the economy is in a precarious state.

According to the Ken Ofori-Atta-led ministry, the strength of the economy was hinged on growth in the third quarter of last year.

The statement said Ghana Revenue Authority (GRA) exceeded its revenue mobilisation target for the year and the country’s strong reserves positions the economy well.

The GRA, which is mostly in charge of domestic revenue mobilisation, exceeded its target by GH¢265.39 million or 0.5 percent.

The Ministry of Finance said there were some serious factual errors in the publications that sought to create a bad picture of the economy.

“For example, Bloomberg stated 81.5 percent as end-of-year debt-to-Gross Domestic Product (GDP) ratio. This is incorrect. Our provisional nominal debt-to- GDP, as of the end of November 2021 was 78.4 percent, which is the latest data available.

“December revenue collections are seasonally the largest for any year and it is unlikely that our financing requirements in December will result in us exceeding 80 percent debt-to-GDP by December 2021,” the ministry said.