News Guide Africa

Tag: Revenue

  • 2% Growth and Sustainability Levy increment is to bolster govt revenue from mining sector …. But AGI opposes it

     

    Rachel masterbating

    Adnan Adams Mohammed

    Government actors have justified the upward adjustment in the Growth and Sustainability Levy imposed on mining companies from 1. 0 percent to 3.0 percent, showing an increase of 2.0%.

    Although, industry players are against the increment as announced in the 2025 budget, the government believes it is a fair adjustment as commodity prices remain favorable to miners.

    According to the government, the increment is a response to citizen’s call on government to maximize revenue from the extractive sector for national development.

    “This is a windfall tax and the minister explained clearly that the economic rent that accrues (from Ghana’s mineral wealth) is about 14 percent and we are taking only 1 percent and that is not enough”, the Deputy Minister for Finance, Thomas Ampem Nyarko noted..

    “Ghanaians have been complaining for so many years about us not taking advantage and getting enough benefits from our extractives and so if the world market prices of gold go up, it is just good that we benefit a little more on that.

    “And the incident of this tax is not on the ordinary Ghanaian but the big mining companies. Even subsequent to that, we had removed the 1.5 percent withholding tax on the small mining companies so this is an opportunity for the country to make a little more from the huge profits that the big mining companies make.”

    As part of the proposed amendment, the government is also seeking to extend the sunset clause of the levy to 2028, thereby ensuring that the country continues to benefit from mining activities for a longer period.

    Meanwhile, the Association of Ghana Industries (AGI) has warned that the move would negatively impact their operations.

    “The Growth and Sustainability Levy for example, affects industry in a big way. And we had been engaging government all these years about it and they assured us that by the end of this year, this levy will be gone and so to have it extended to 2028 is a big blow to us”, the Greater Accra Regional Chairman of AGI, Tsonam Akpeloo, said in an interview last week.

    “We intend to engage with the government to see if this 2028 date will be reconsidered to ensure that we bring it closer because we have made plans towards it because if you are taking 1 percent to 5 percent of revenue, it is naturally going to affect us in industry, especially in the time that we are expected to create more jobs under the 24-hour economy.”

     

     

  • Ghana to exit debt default by mid-2025 – Fitch

    Debt restructuring

     

     

    Adnan Adams Mohammed

     

    All things being equal, Ghana is expected to exit from sovereign default by July 2025, Fitch Ratings has projected.

     

    The projection is based on expectations of the Ghana finalizing its external debt restructuring by the end of June 2025.

     

    Also, the international rating agency is optimistic that Ghana will complete the non-bond debt restructuring by the close of this year as disclosed during a recent webinar on debt restructuring in Ghana, Zambia, and Ethiopia.

     

    “For Ghana, we also expect the completion of the common framework restructuring by the first half of next year”, Thomas Garreau, Associate Director of Europe, Middle East, and Africa Sovereign Ratings at Fitch projected. “There are some elections, and that would delay the completion of the process, hence our forecast of next year.”

     

    Ghana reached an agreement with the Official Creditor Committee (OCC) on the parameters for official debt treatment in January 2024, followed by the completion of a Eurobond exchange in October 2024.

     

    The restructuring process has so far covered approximately US$14.2 billion in Eurobonds, including Principal Debt Instruments (PDIs), with the associated haircut amounting to 6.2% of the country’s Gross Domestic Product (GDP).

     

    The restructuring has already begun easing Ghana’s fiscal pressures. Fitch estimates that interest payments have been reduced by 8% of projected revenue for 2024, 5% in 2025, and 4% in 2026, offering some relief to government finances.

     

    Fitch’s forecast aligns with Ghana’s ongoing efforts to stabilize its economy, even as the country navigates the complexities of election-year dynamics in 2024.

     

  • ECG’s revenue losses hit ¢9.7bn in 2022.

    Electricity Company of Ghana

     

    As of 2022, the Electricity Company of Ghana’s revenue losses had risen to GH¢9.7 billion, the Africa Centre for Energy Policy (ACEP) has revealed.

     

    It was GH¢295 million in 2017.

     

    ACEP’s Policy Lead on petroleum and conventional energy, Mr Kodzo Yaotse, told journalists at a press conference last week that: “The growing fiscal burden imposed on the economy by ECG’s poor performance has become a ticking time bomb that can undermine the progress made after the domestic and international debt restructuring to keep Ghana solvent.”

     

    He warned: “With the level of debt accumulation and the intervention required of the state, it is just a matter of time before Ghana is plunged into another debt crisis.”

     

     

    Mr Yaotse pointed out that: “With IPP debt mounting and gas suppliers and transporters demanding payments, the pressure on the government to sacrifice social investment is high.”

     

    He believes the top management of ECG must be removed to salvage what is left of the company.

     

    “The political lethargy to enable ECG to deliver value to the people of Ghana continues to hurt Ghana’s budget and, by extension, development efforts,” he noted.

     

    He said: “The Energy Sector Recovery Programme (ESRP) estimates that realised power sector shortfalls between 2019 and 2023 were about US$8.25 billion.”

     

     

    “This is a sheer waste of public resources that cannot persist in light of the above.”

     

     

  • Ghana misses revenue target by 25% in first four months.

     

    Adnan Adams Mohammed

    Data from the Bank of Ghana indicates that, total revenue and grants for the first four months of 2024 amounted to GH¢30.4 billion (2.9 percent of GDP) compared with a target of GH¢37.7 billion (3.6 percent of GDP).

    Bank of Ghana

    Also, total expenditures on commitment basis, including other outstanding payments for the period amounted to GH¢49.0 billion (4.7 percent of GDP) compared with a target of GH¢55.5 billion (5.3 percent of GDP).

    According to the Bank of Ghana Governor, Dr Ernest Addison, Ghana’s fiscal performance is “broadly” in line with the targets agreed under the International Monetary Fund (IMF) Balance of Payment supported programme.

    Provisional data on the execution of the budget “shows that the primary balance (commitment basis) was in a deficit of 0.6 percent compared with a target deficit of 0.2 percent.”

    The overall broad budget balance (commitment basis), “was a deficit of 1.8 percent of GDP compared with a deficit target of 1.7 percent of GDP.

  • Govt to miss 2022 revenue target by GH¢11.5bn – Fitch Solutions

    Govt to miss 2022 revenue target by GH¢11.5bn – Fitch Solutions

    The country’s total revenue will end 2022 at ¢89.0 billion, far below the target of ¢100.5 billion, the July 2022 Africa Monitor Report by Fitch Solutions has revealed.

    This will keep the fiscal deficit high [8.5% of Gross Domestic Product, excluding bailout costs] as revenue was below 13.6% of its target in the first quarter of this year.

    Revenue growth, the report said, will remain above trend, but will miss the official target.

    “We at Fitch Solutions expect Ghana’s fiscal deficit to narrow to 8.5% of GDP in 2022, from 9.3% in 2021, facilitated by a widening tax base and higher oil receipts. We have revised our 2021 deficit from 11.3% previously on the back of full-year data published by the Ministry of Finance, which shows higher-than-expected revenues of ¢70.1bn, while total public expenditure rose to ¢109.3 billion”.

    However, public revenue will expand by 27.0%, above the 10-year pre-pandemic average of 23.4%.

    Fitch Solutions pointed out that the recent implementation of the Electronic Transaction Levy (e-levy) will further support revenue growth over the year. However, it will fall short of the 5 billion cedis revised projected targeted, for two reasons.

    This is based on two reasons.

    “First, the government had initially proposed a 1.75% tax on electronic financial transactions, but lowered it to 1.5% following pushback from the opposition. Second, authorities had planned for the tax to come into force on January 1 2022. However, the e-levy only took effect on May 1, five months after the start of Ghana’s fiscal year”.

    The report added that despite some fiscal consolidation efforts, public expenditure will remain elevated, preventing a more substantial narrowing of the deficit.

    In the 2022 budget, the government stated it will commit to ‘expenditure rationalisation and reforms’ in order to improve its fiscal position and maintain debt sustainability.

    However, Fitch Solutions projects that due to the rigid nature of Ghana’s expenditures, there will be limited room to significantly restructure spending over the short term.

    “We believe that due to the rigid nature of Ghana’s expenditures, there will be limited room to significantly restructure spending over the short term. Indeed, Ghana’s public wage bill and debt servicing costs accounted for 67.4% of total spending over quarter 1, 2022.”