Ghana’s main opposition leader said he would renegotiate an International Monetary Fund program to reduce taxes and smooth loan repayments if he wins next month’s elections.
“We must look at rationalizing the issue of tax revenues,” to help the economy as it emerges from a debt crisis, John Dramani Mahama said in an interview at his office in the capital, Accra with Bloomberg.
Under the current IMF program “government is not doing much to reduce expenditure, but doing everything to increase taxes and it’s making Ghana an unfavorable destination for business,” the former president and leader of the National Democratic Congress said.
A spokeswoman at the finance ministry didn’t immediately respond to phone calls or text messages seeking comment.
Ghana was forced to swallow the new tax measures introduced by President Nana Akufo-Addo’s administration last year to qualify for the $3 billion bailout program from the Washington-based lender after defaulting on its debts.
The measures included an increase in value added tax by 2.5 percentage points to 15% and a growth and sustainability levy on the pretax profit of all entities capped at 5%.
Mahama, 65, the favorite to win the Dec. 7 presidential elections, also said talks with the IMF would include how to refinance domestic debt worth 182 billion cedis ($11.1 billion) due in 2026, and a big commercial loan payment maturing just before 2028.
“We need to look at how we can refinance some of these so that we can smoothen out the trajectory of the debt repayments,” he said. “Our aim now is stability, how do we bring down inflation, stabilize the macro environment and our currency.”
Extending the fund arrangement, which expires in May 2026, won’t be ruled out if it is needed to accommodate the changes, he said.
“We hold the position that whichever party wins the elections will have to do some kind of a review of the IMF program,” Godfred Bokpin, an economist and professor at the University of Ghana Business School, said by phone. They’ll have to “see what adjustments they can make to increase fiscal space to implement some of the programs” they’ve proposed in their election campaigning.
Ghana sought the IMF’s help after its debt ballooned to more than 100% of gross domestic product in 2022, forcing it to default and fueling a sharp depreciation in its currency and a cost-of-living crisis.
Implementation of reforms under the facility helped it rework its debt and exit default last month.
The country’s restructured eurobonds maturing in 2029 rose a second day by 1.4 cents to 87.25 cents on the dollar as at 4:23 p.m. in London. Notes maturing in 2035 gained 1.2 cents to 70.34 cents on the dollar.
The reforms also contributed to inflation slowing to 22.1% from 54.1% in December 2022, but many Ghanaians and businesses are still struggling to cope and blame the ruling New Patriotic Party for their hardships.
Accra-based Global InfoAnalytics Ltd.’s latest survey shows Mahama winning 51.1% of the vote and the ruling party’s candidate Vice President Mahamudu Bawumia 37.3%. There are 11 other contenders.
The NDC and NPP have dominated Ghana politics since 1992, with power changing hands between them. Akufo-Addo’s second and final four-year term ends Jan. 7.
Mahama has also proposed several other initiatives to revive the economy. They include creating a “24-hour economy” or three eight-hour work shifts, and investing $10 billion to develop projects in industries such as petrochemicals, mining and transport under a proposal known as “the Big Push.”
The plan, he said, will need the private sector and foreign investment to deliver.
“We’re going to make Ghana a good and pleasant environment for investors again,” Mahama said.
Source: Bloomberg
