Ghana Lawmakers to Vote on New Tax Bills to Rake in $340 Million

Moses Mozart Dzawu and Ekow Dontoh
·1 min read

(Bloomberg) -- Ghanaian lawmakers are set to vote on new taxes to rake in an additional 3.96 billion cedis ($340 million) in revenue this year and satisfy a key requirement for the International Monetary Fund to approve a $3 billion bailout.

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The country’s hung parliament is scheduled to deliberate bills Thursday to increase some income taxes, company taxes, as well as the excise duty on cigarettes and various alcoholic and sweetened beverages.

Ghanaians have borne the brunt of the country’s debt woes. The revenue measures come after a rare move to restructure local debt — bondholders exchanged 87.8 billion cedis ($7.1 billion) of notes that paid an average of 19%, with bonds returning as little as 8.35% — have resulted in losses for financial institutions. The country is restructuring most of its liabilities to cut its debt from an estimated 105% of gross domestic product in 2022 to 55% by 2028.

Earlier this week, policymakers raised the benchmark lending rate to a record 29.5% to curb inflation that rose 53% in February, compared to a year earlier. The move is set to further increase borrowing costs for households and businesses.

Ghana, which had hoped to receive approval for the IMF support package this month, is now targeting an agreement by the end of April after bilateral creditors give the necessary financial assurances, Central Bank Governor Ernest Addison said earlier this week. The country is also in talks with private creditors after unilaterally suspending payments on $13 billion of eurobonds.

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