The Director of the Institute of Statistical, Social and Economic Research (ISSER) of the University of Ghana, Professor Peter Quartey, has stated that Ghana’s programme with the International Monetary Fund (IMF), will come with both benefits and disadvantages for Ghanaians, the economy and businesses.
Speaking on Top Story on Joy FM, Prof Quartey said that the programme will bring about exchange rate stability and also help bring down inflation rate.
“As we are witnessing now, the exchange rate is appreciating, if it’s stable then you will not see an automatic adjustment. So it is something that will bring some hardships in some areas but benefits as well,” he noted.
However, Prof Quartey stated that “let’s take the case of employment, I have seen in the budget statement of 2023 that there is a freeze on employment. What it means is that we will not be able to employ the number of youth we are churning out of our institutions annually and that is a huge challenge. Already youth unemployment is huge and if for three years you cannot employ, you can imagine the effect.”
On revenue mobilisation, Prof Quartey stated that taxes need to be increased in some areas to help with local revenue mobilisation as the IMF has suggested. This he said would affect many Ghanaians and businesses going forward.
“We are basically doing well when it comes to income tax except that it is only a few people who are overburdened. Where the challenge is, is VAT. If you look at our VAT receipts compared to what is within the sub-region, we are way off the target. That is one area that may be increased and with the effect of increasing VAT, it might bring challenges.”
Nonetheless, the economist believes that signing up for an IMF programme is not just about receiving funds from the Bretton Woods institution to temporarily restore some stability in the economy, but also taking advantage of the programme’s details to raise revenue among others and limit reliance on external sources of funding.
This comes after the International Monetary Fund (IMF) finally approved Ghana’s request for a $3 billion Balance of Payment support to stabilize the economy.
The Governor of the Bank of Ghana (BoG) Ernest Kwamina Yedu Addison, on Thursday revealed that the first tranche of $600 million from the $3 Billion credit facility, will hit the bank’s account on Friday, May 19, 2023.
The second tranche of disbursement would be expected by December 2023. This is however subject to meeting some conditions under the programme.
The remaining amount will be disbursed in tranches of $360 million every six months, subject to meeting the IMF programme conditions.
Meanwhile, the IMF has proposed the scrapping of tax exemptions, adjustment of levies on fuel, and an increase in income tax as some measures the Ghanaian government could implement following the approval of the programme.
This, the IMF said, would help to boost revenue mobilization under its $3 billion support programme.
This is contained in IMF’s May 2023 country report on Ghana’s request for the $3 billion support programme.
Managing Director of the Fund, Kristalina Georgieva says the programme is only the first step towards restoring Ghana’s economic stability.
Thus, the Minority in parliament is asking Ghanaians to be prepared for the shocks that will accompany the bailout secured from the International Monetary Fund (IMF).
According to the caucus, many of the conditionalities could have been avoided if the government heeded their call to go to the Fund earlier in 2022.
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