News Guide Africa

Tag: Dr Theo Acheampong

  • Tax concerns in Mahama’s next gov’t

    President Elect

     

    Adnan Adams Mohammed

     

    President-elect, John Dramani Mahama’s promise to cut or abolish a number of taxes in his 120days governance faces mixed concerns from the public.

     

    While other stakeholders of society uphold that, it is unrealistic for the next Mahama’s administration to cut or abolish some of the taxes; that is, e-levy, the COVID levy and the 10% levy on sportbets as it will affect the economy while affecting the moral standard of the young population. Some economists believes otherwise.

     

    An Economist, Dr Theo Acheampong has stated that there will be minimal impact on public finances when the e-levy and Covid levy are removed. In his analysis of these two taxes, he explained that together, they raised GHS3.259 billion or USD 296 million in 2023, accounting for 2.4% of total domestic revenue or 0.4% of Ghana’s 2023 Gross Domestic Product (GDP).

     

    “These two taxes can easily be scrapped. In my view, scraping them would have a limited impact on public finances but bring significant relief to many citizens and businesses,” Dr Acheampong shared on his social media handle.

     

    However, the Institute of Community Sustainability has said that sports betting threatens the well-being of Ghana’s youth. According to the Institute, the proliferation of sports betting, particularly among young people, has reached alarming proportions hence their call to the government to consider increasing the betting tax to 50% from the current 10% to curb this menace.

     

    President-elect Mahama, during the campaign towards 2024 elections promised to scrap sports betting tax and others.

     

    “First is resetting the economy for prosperity. In the first 120 days in office, we will hold a national economic dialogue to draw up a four-year fiscal consolidation plan. We would rationalize taxes, abolishing among others the obnoxious e-levy, the COVID levy and the 10% levy on bets winning.”

     

    However, a s statement issued by the Executive Director of Institutes of Community Sustainability, Eric Jerry Aidoo, said that the current state of sports betting in Ghana is worrisome. Many young people are spending an inordinate amount of time and money on betting platforms, with some staking 50% of their winnings only to lose it all again.

     

    According to the Institute, “This vicious cycle of betting and losing is not only draining the financial resources of our youth but also eroding their productivity and potential.

     

    “If left unchecked, this betting epidemic could have severe consequences for our society. Desperate individuals may resort to crime, such as robbery, to fund their betting habits. Companies may also suffer as employees squander their salaries on betting, leading to financial losses and decreased productivity.”

     

    In contrast, advanced countries have recognized the dangers of betting addiction and have established rehabilitation centers to provide support and treatment to affected individuals. Unfortunately, Ghana lacks such facilities, with only five psychiatric hospitals available, which are not even up to standard.

     

    “Increasing the betting tax to 50% would be a bold step towards addressing this issue. The revenue generated from this tax could be channeled towards establishing rehabilitation centers and providing support services for individuals struggling with betting addiction”, the Institute posited.

     

    Moreover, a higher betting tax would also serve as a deterrent to young people who are tempted to indulge in sports betting. By making betting more expensive, we can reduce its appeal and encourage our youth to seek more productive and fulfilling pursuits.

     

    Consequently, another analysts, Chief Executive Officer of Dalex Finance, Joe Jackson, raised concerns about how the incoming Mahama administration will generate revenue for development if it removes all the taxes it has promised to abolish.

     

    Jackson highlighted the significant challenges in managing the economy, particularly with the manifesto pledge to remove certain taxes, including the e-levy.

     

    “Let us not be mistaken, in 2025, we have to look at how we are performing in terms of revenue because some of the items are going to go out. There has been a manifesto commitment to take out the e-levy, betting tax, the COVID levy. So a lot of issues are going to come out and I have no doubt in my mind that the challenge is going to be huge”, Dalex CEO said during a TV conversation.

     

    “So, let’s focus on the E-levy and COVID-19 levy, two consumer taxes that irk many Ghanaians and for which both the NDC and NPP promised to do something about, besides other tax handles.

     

     

     

  • Ghana securing a $10.5bn debt relief looks bleak – Economist predicts

    Adnan Adams Mohammed

     

    An economist has predicted that Ghana may find it difficult to get a debt relief of about US$10.5 billion from external creditors including bilateral lenders.

     

    The economist asserts that, experiences from Zambia and others suggest that the road ahead for the nation to secure US$2.6 billion annually in debt relief for the next four years will be difficult.

     

    Already, Fitch rating agency has indicated that Ghana has a long way to go to restructure its more than US400 billion debt and predicting a second round of Domestic Debt Exchange Programme (DDEP). The country has already submitted a proposal on debt restructuring to its official creditors. Speaking in an interview, the economist said, the country may not get a favourable deal from the external creditors.

     

    “It’s going to be a bit difficult because we’ve seen similar instances with the likes of Zambia. But there’s been a major contestation around how we treat certain creditor groups”, Policy Analyst and Economist, Dr. Theo Acheampong posited.

     

    However, a team of experts from the International Monetary Fund (IMF), led by Stéphane Roudet, have concluded their visit to Ghana, which took place from June 8 to June 15, 2023.

     

    The visit aimed to engage with Ghanaian authorities and stakeholders to assess recent economic developments and review the implementation of the Fund-supported program approved on May 17, 2023.

     

    In a statement issued at the end of the visit, Mr. Roudet acknowledged positive signs of stabilization in the Ghanaian economy.

     

    “In discussing progress on the debt restructuring operations, we reiterated that timely restructuring agreements with creditors are essential to secure the expected benefits of the Fund-supported program.”

     

    Apparently, furthering his argument, Dr Acheampong thinks Ghana is too much exposed to Eurobonds and other commercial loans.

     

    “So I think, the road ahead is going to be quite challenging in the sense that all the $2.6 billion they [creditors] need to get every year, it probably will not amount to that and this is just on the basis of some of the evidence we’ve seen with other countries that have attempted to go down this road”.

     

    “It does make it quite difficult largely because most of the commercial creditors have different obligations to their shareholders, but also because Ghana in a way defaulted on making the interest payment on a number of these debt obligations since December of last year”.

     

    Again to him, it does make the process rather much more complicated since Ghana has already indicated that it is looking at haircuts of about 30% to 50%.

     

    “I think that is going to be a bitter pill to swallow for a number of these commercial creditors”, he added.

     

    The move could be seen as a major step for the government to get the Official Creditor Committee including the Paris Club formed in May 2023 to consider the country’s debt restructuring programme.

     

    This also signifies the beginning of a more detailed negotiating process that will likely see a number of proposals being exchanged.

     

    Although, Reuters have said, the ‘working proposal’ is however not legally binding.

     

    The Common Framework process was set up by the G20 in 2020 to bring China and other newer creditor nations into joint sovereign debt restructuring negotiations, for its external debt rework.

     

    Ghana is hoping to cut about $10 billion out of a total of $52 billion over the next three years to successfully implement the International Monetary Fund programme.

     

    The country’s debt to China and members of the Paris Club is estimated at $5.4 billion. As of December 2022, the total external debt stood at $28.9 billion.

     

    It has already completed a Domestic Debt Exchange Programme in February 2023 in which about 65% of bondholders took part in the exercise.