News Guide Africa

Tag: Economic stability

  • Gov’t advised to leverage financial institutions to boost tax compliance

     

     

    “Boosting tax compliance through financial institutions.”Prof Williams Coffie said .

     

     

    Adnan Adams Mohammed

     

     

    A finance expert has advised government to leverage on financial institutions to encourage tax compliance among small businesses.

     

    Prof. William Coffie believes that existing financial institutions, such as microfinance agencies, the Ghana Enterprise Agency (GEA), and the yet-to-be-established Women’s Bank, could serve as avenues to promote tax compliance among small businesses.

     

    Although, he acknowledged the challenges of formalizing the informal sector, he emphasized the need for a strategic approach to integrating the informal sector into the tax system.

     

    “With the proposal to establish the Women’s Development Bank, we can use this and other small medium, and micro firms to comply with tax payment”, Head of the Department of Accounting at the University of Ghana Business School (UGBS), Prof. William Coffie pointed when speaking at a post-budget discussion organised by Lima Partners, last week.

     

    “We have a number of these microfinance institutions and agencies such as the GEA, MASLOC, and now the Women’s Bank. Why don’t we use these avenues to encourage micro and small businesses to comply with the reporting and record-keeping of their taxes? And say that if a small business or a micro firm could produce your account for three years and continuously show that you are paying your taxes, we are going to support you with a micro-credit as a way to support them.

     

    “I believe that once these small business owners know that there is support for them just by good behaviour, they may comply,” he stated.

     

    Meanwhile, the Minister for Finance, Dr Cassiel Ato Forson, last week gave his assurance to heads of commercial banks that, the government remains committed to responsible economic management and will not repeat the financial instability experienced in 2022.

     

    He explained that lessons learnt from past economic challenges, are guiding the government to implement measures that promote stability and growth.

     

    “Reckless financial decisions would not be tolerated, as the government aims to restore confidence in the banking sector and the broader economy”, Dr Forson noted while speaking to the Managing Directors of commercial banks operating in Ghana last week.

     

    The Finance Minister stressed that a coordinated policy approach would be essential in ensuring sustainable growth and protecting the financial system from future crises.

     

    He urged banks to collaborate closely with the government in implementing strategies that enhance liquidity, encourage investment, and strengthen economic resilience.

     

    Dr Forson reiterated that the government’s priority is to create a stable economic environment that benefits both financial institutions and the general public.

     

    “Policies would be carefully designed to support long-term stability, ensuring that Ghana’s financial sector remains strong and capable of driving national development.”

     

     

     

     

  • Gross reserves improve to cover 4 months of imports

     

    Ghana’s reserves hit US$8.98bn, covering 4 months of imports.

     

    Adnan Adams Mohammed

     

    The Bank of Ghana has announced that Ghana’s Gross International Reserves (GIR) increased to a stock position of US$8.98 billion at the end of 2024, enough to cover 4.0 months of imports.

     

    This exceeded targets under the IMF programme. The 2024 remarkable improvement compares favourably with the 2023 reserves of US$5.92 billion (2.7 months of imports).

     

    The Bank of Ghana’s Gold for Oil Policy and Domestic Gold Purchasing Programme contributed significantly to this through the strategic accumulation of gold.

     

    “This is part of the Central Bank’s broader efforts to shield the economy from external shocks, enhance the country’s foreign exchange reserves and strengthen Ghana’s position in global markets”, Governor Dr Ernest Addison told journalists last week at the latest MPC press briefing.

     

    “It is also a decisive step toward stabilising Ghana’s financial outlook, especially as global uncertainties weigh heavily on economies worldwide.”

     

    In terms of impact, the increase in gold reserves is expected to  serve as a hedge against inflation, reduce the country’s vulnerability to currency fluctuations and bolster investor confidence.

     

    Market watchers are therefore keenly focused on the implications for Ghana’s fiscal policy and its standing in the global economy, as the Bank of Ghana continues to diversify and strengthen its reserves.

     

    Comparable on the continent, Libya has maintained a substantial foreign currency reserve totaling $80.7 billion in 2024, positioning it as the top country in Africa in this regard. This achievement coincides with Libya’s status as one of the continent’s major oil exporters.

     

    Meanwhile, on the global front, China had, by far, the largest international reserves in 2024, with

    US$3.59 trillion in reserves and foreign currency liquidity.

     

    Ghana has risen to become the fifth-largest holder of central bank gold reserves in Africa, with 28.1 tonnes as of October 2024. This marks a significant increase from May 2023, when its reserves stood at just under 9 tonnes, reflecting consistent efforts to bolster its holdings.

     

    Consequently, external sector conditions remain positive, with sustained and stronger-than-programmed rebuilding of reserve buffers contributing to the stability of the domestic currency. The performance of the external sector was mainly driven by strong growth in gold exports, which also largely impacted positively on growth.

     

    In the outlook, the external sector is expected to remain strong as commodity prices remain favourable amid improvements in production. Overall, while the external sector conditions are expected to provide an anchor to exchange rate stability, key risks in the outlook including challenges in the energy sector will have to be closely monitored.

     

  • Don’t be in a haste to scrap e-levy, COVID levy – ISSER to gov’t

    E-levy

     

    The Institute of Statistical, Social, and Economic Research (ISSER) has recommended against an immediate repeal of the E-levy and COVID-19 levy, cautioning that a sudden removal could disrupt the nation’s ongoing IMF-backed economic recovery plan.

     

    In its recent State of the Ghanaian Economy Report, ISSER proposed a phased elimination of these levies as part of the 2025 budget to avoid undermining fiscal stability.

     

    Together, the E-levy and COVID-19 levy are projected to generate over GH¢5 billion in revenue, with GH¢2.1 billion from the E-levy and GH¢3.172 billion from the COVID-19 levy.

     

    “Scrap E-levy (GH¢2.1bn), COVID-19 Levy (GH¢3.172bn), Betting Tax – What is the alternative?” the report questions, urging policymakers to carefully evaluate the timing and impact of eliminating these revenue streams, which are essential for meeting Ghana’s IMF program obligations.

     

     

    ISSER’s stance reflects a nuanced approach to balancing public relief with fiscal discipline. In the current economic climate—marked by inflationary pressures and a depreciating currency—these levies are seen as critical sources of revenue.

     

    The report emphasises that any reduction should be aligned with broader fiscal policies to sustain economic stability.

     

    The report also pointed to the Betting Tax, suggesting it could be developed as an alternative revenue source, though its specifics remain undefined.

     

    ISSER advises the government to explore such options to create a sustainable revenue framework that eventually replaces the E-levy and COVID-19 levy without jeopardising IMF commitments.

     

  • Ghana eagerly awaits $360m IMF money ..as Board is to consider second staff review in June.

     

     

    Adnan Adams Mohammed

    All things being equal, Ghana’s $3 billion extended credit facility programme second review by the International Monetary Fund Staff Level team is ready to be presented the Board for consideration before June ending, a senior official of IMF has said.

    The second staff review, if approved by the Board will pave way for the release of $360 million more as the third tranche of the $3 billion facility.

    International Monetary Fund

    The IMF staff team and Ghana’s team reached a staff-level agreement for the second review of the programme in April this year. Already, Ghana has received $1.2 billion in two separate $600 million tranches.

    “The aim is to bring the review to the IMF’s Executive Board before the end of June, and once approved by the Board, the review would give Ghana access to about $360 million,” Ms. Julie Kozack, Director of Communications of the International Monetary Fund (IMF), has said at a press conference in Washington, D.C. last week.

    She noted that Ghana’s exonomy has seen progress since the programme started.

    “The authorities’ strong policy and reform efforts under the programme are bearing fruit, and signs of economic stabilisation are emerging.”

    She added: “Growth, for example, in 2023, was higher than anticipated, and the growth projections are being revised upward.”

    Also, she noted: “Inflation has been declining rapidly, the fiscal and external positions have improved, and exchange rate volatility has declined quite significantly.”

    “The authorities are making good progress on their comprehensive debt restructuring.” “The domestic debt exchange was completed last year, and on January 12th, the government reached agreement in principle with its official bilateral creditors.”

    ‘Ghana is also engaging with external private creditors to seek their support”, Ms Kazack added.