Utility prices, VAT, and E-Levy rates will increase due to IMF bailout

Utility rates, VAT, and E-Levy rates will increase due to the IMF bailout

The price of energy, VAT, and e-levy will rise as a requirement for getting a US$3 billion extended loan line from the International Monetary Fund (IMF).

Ghana's administration intends to take a number of actions to solve the country's economic problems and obtain an IMF extended loan facility worth US$3 billion. The administration has changed its revenue and spending policies and is dedicated to rebuilding reserve buffers while securing external concessional financing in order to increase debt sustainability.

In order to resolve structural impediments, contingent liabilities of state-owned companies, commitment controls, arrears buildup, and domestic revenue mobilization, the Bank of Ghana is expected to execute policies that will reduce inflation and restore macroeconomic stability. The administration intends to protect social safety programs and guarantee an equitable distribution of the adjustment burden.

The administration hopes to obtain the bailout by achieving a primary surplus of 1.5% of GDP in the medium term, bringing down inflation to around 8%, and restoring external buffers with gross international reserves covering three months of imports by 2026. The administration also aims for competitive exports to surpass 37% of GDP and real GDP growth of 5% over the medium term.

In an investor presentation, Finance Minister Ken Ofori-Atta presented these proposals with assistance from Dr. Ernest Addison, Governor of the Bank of Ghana.