IMF to discuss 2025 budget with govt amid plans to scrap key taxes

• Posted on February 10, 2025February 10, 2025
• by Nana Kwesi Coomson
• Comment

The International Monetary Fund (IMF) is set to begin critical discussions with the government this week as the country finalises its 2025 budget which is scheduled for presentation in March.

The talks come at a pivotal moment, with the government planning to scrap key tax lines, including the contentious E-levy, betting tax, and COVID-19 levy. 

These taxes, introduced by the previous government to boost domestic revenue, have faced widespread opposition from businesses and citizens.

With Ghana under an IMF-backed $3 billion Extended Credit Facility (ECF) programme, the fund is expected to scrutinise how these proposed tax cuts align with the country’s fiscal consolidation efforts.

The IMF will be seeking assurances that the removal of these levies will not undermine revenue targets or derail Ghana’s economic recovery.

Beyond revenue concerns, the government is also under pressure to resolve Ghana’s mounting energy sector debt, which has been a major strain on public finances. 

The liabilities of the sector, estimated to exceed $2 billion, continue to threaten the stability of power producers and the broader economy. Independent Power Producers (IPPs) have repeatedly warned of potential supply disruptions if the government fails to settle outstanding arrears.

The financial distress of the energy sector has contributed to the cedi’s depreciation, as the government requires substantial foreign exchange to meet payment obligations to power producers. 

The IMF will be pushing for concrete measures to address the structural inefficiencies in the energy space, improve cost recovery and ensure a sustainable financial framework for the country’s energy industry.

Government is expected to present a clear roadmap to the IMF, outlining how it intends to offset revenue losses, settle energy sector debts and sustain macroeconomic stability while implementing these tax reforms.

The outcome of the engagements  will be closely watched by investors, businesses and multilateral partners as Ghana seeks to strike a delicate balance between fiscal prudence, economic growth and energy sector stability.