Fiscal policy specialist with Oxfam, Dr Alex Ampaabeng, has shared is expectations on the upcoming 2022 Mid-year Budget Review presentation by the Finance Minister, Ken Ofori-Atta.
Speaking at a CSO Budget Forum on Thursday, July 7, 2022, in the run up to the Finance Minister’s presentation on July 13, 2022, Dr Ampaabeng, averred given the present situation of the country requesting for an IMF bailout programme, matters of significant importance which need to be addressed by the Finance Minister in the mid-year budget review include debt sustainability, E-Levy and expenditure on government’s flagship programmes.
“The IMF conditionalities would not have been known before the Finance Minister presents the 2022 mid-year budget review, but definitely the government will be preparing towards the proposed conditionalities by the IMF.
“And in view of the present situation that the country is seeking for an IMF Programme, Ghanaians would want to know how the government is going to deal with its debt sustainability challenges, because we as a country are going to the IMF because of debts, and so how is government going to manage it.
“Because your debts don’t automatically go away simply because you have gone to the IMF, so it is crucial we know that in the mid-year budget review,” he remarked.
“Concerning the E-Levy, we all know it has failed, but Ghanaians would want to know government’s position on the levy, is it that government will be going back to make some changes to the levy, modify it or remove it completely which I doubt.
“Then there is the expenditure on government’s flagship programmes like the Free SHS, we would want to know how these programmes are going to fare under an IMF programme and the future of such programmes,” he added.
The Minister for Finance, Ken Ofori-Atta is expected to present the Mid-Year Budget Review in Parliament on 13 July 2022.
The Majority Leader, Osei Kyei-Mensah-Bonsu revealed this in Parliament on Friday, July 1, 2022.
The budget review, which is in accordance with Article 179 of the 1992 Constitution and the Public Financial Management Act 921, presents the opportunity to revise macroeconomic targets and present a comprehensive economic outlook for the rest of the year.
This is normally based on inflows and outflows within the first six months of the year.
The government is expected to announce interventions to recover the economy and provide a supplementary estimate for the 2022 financial year.
It is also expected that the Minister will use the occasion to formally announce the government’s engagement with the International Monetary Fund (IMF).
Gov’t reviewing Free SHS in Enhanced Domestic Economic Programme
The government has commenced a review of its major social intervention programmes on the back of developing an Enhanced Domestic Economic Programme (EDP) expected to be supported by the IMF.
According to the Ministry of Finance, some of these social intervention programmes under review are the Free SHS, School Feeding Programme and Agenda 111.
In a Q&A document on Ghana’s request for a bailout from the IMF and published by the Finance Ministry, the Ministry states that, the review of the said social intervention programmes is not to scrap or cancel them but to “see how best they can be optimized and become more efficient.”
According to the Ministry, the aforementioned social intervention programmes are of utmost priority to the government and as such, they will be maintained.
The Ministry, however, added that, lower priority or non-productive spending (white elephant projects) will be curtailed as part of government’s fiscal adjustment under the IMF-supported programme.
“IMF programmes are flexible in response to evolving circumstances. Ultimately, the IMF encourages governments in their programme design to protect the poor or vulnerable groups from the impact fiscal adjustment. Free SHS, the School Feeding programme, among others are good social intervention programmes and it is the lack of financing and unsustainable debt burdens that could constrain a government’s ability to maintain its level of spending, including social or investment spending.
“In our situation, the IMF may ask Ghana to consider curtailing lower priority or non productive spending (such as “white elephant” projects) as part of its fiscal adjustment but to preserve priority social spending, including on health and education. The objectives are typically aimed at providing a social safety net for the poor and ensuring that investment spending boosts the economy at a critical time. However, Government in its Enhanced Domestic Programme has started a review of these programmes to see how best they can be optimized and become more efficient,” the Ministry stated.
E-Levy: 43.8% of Ghanaians revert to using cash; 20.7% exploring loopholes in system
A study on the impact of the electronic transaction levy on electronic transfers 45 days after the implementation of the levy has revealed some interesting findings.
Possibly the first empirical study of the impact of E-Levy on Ghanaians after its implementation, the study by Think Tank, IMANI Ghana reveals close to 43.8% of Ghanaians have reverted to using cash in undertaking transactions, retrogressing the government’s cash lite economy agenda.
Per the study, another 20.7% of the Ghanaian populace, are exploring loopholes in the implementation of the levy by collaborating with mobile money vendors.
A further 18.1% of the population are using mainstream banks to undertake transactions all in the bid to avoid the E-Levy charge.
Additionally, a whooping 69% of the Ghanaian populace when undertaking digital transactions, spread the amounts across days making small payments [less than GHS 100] in order to escape the E-Levy charge.
Delivering a presentation on the findings of the study, King Carl Duho, a research consultant with IMANI Ghana, averred the use of cash, banks, loopholes in the E-Levy tax system and spreading of amounts across days were all coping strategies being employed by Ghanaians following the implementation of the controversial levy.
Adding that, volume in digital transactions had reduced by some 83% since the introduction and subsequent implementation of the levy.
Source: norvanreports