IMF Bailout: Utility tariffs, VAT and E-Levy rates to go up

IMF Bailout: Utility tariffs, VAT and E-Levy rates to go up

As a prerequisite for obtaining a US$3 billion extended credit facility from the International Monetary Fund (IMF), there is going to be an increase in electricity tariff, VAT, and e-levy rates.

The government of Ghana plans to implement various measures to address economic challenges and secure a US$3 billion extended credit facility from the IMF. To improve debt sustainability, the government has adjusted revenue and expenditure measures and is committed to rebuilding reserve buffers while mobilizing external concessional financing.

The Bank of Ghana is expected to implement policies to control inflation and restore macroeconomic stability by addressing structural bottlenecks, contingent liabilities of state-owned enterprises, commitment controls, arrears accumulation, and domestic revenue mobilization. The government plans to safeguard social protection programs and ensure a fair distribution of the burden of adjustment.

To secure the bailout, the government aims to achieve a 1.5% of GDP primary surplus in the medium term, reduce inflation to below 8% in the medium term, and restore external buffers with gross international reserves reaching 3 months of import cover by 2026. The government also targets a real GDP growth of 5% over the medium term and competitive exports surpassing 37% of GDP.

These plans were presented by Finance Minister Ken Ofori-Atta and supported by the Governor of the Bank of Ghana, Dr. Ernest Addison, in an investor presentation.