Institute of Economic Affairs (IEA) has expressed grave concerns over the government’s recent fiscal policy shifts, asserting that the reduction of the Growth and Sustainability Levy (GSL) from 3% to 1% significantly undermines the state’s ability to maximize benefits from its natural resources.
According to the Institute, this decision effectively cancels out the revenue gains intended by the new sliding-scale royalty regime, creating a “policy contradiction” that favors investor “cushioning” over the long-term national interest.
During a recent press briefing in Accra, the IEA questioned the logic of increasing mineral royalties only to simultaneously dilute those gains through tax concessions.
The Institute argued that the government’s move to lower the GSL a levy designed to support economic stability acts as a reactive concession to investor pressure rather than a coherent fiscal strategy.
Furthermore, the IEA challenged the “questionable” 12% cap on gold and lithium royalties within the new Minerals and Mining Royalty Regulations, 2025, noting that such a limit prevents the nation from fully capturing windfall profits during periods of record-high world market prices.
“The IEA views the reduction as a step that weakens the objective of maximizing national benefits from the natural resources sector. Fiscal policy in the mining sector must be coherent, predictable, and aligned with a long-term national interest, not reactive concessions to investor pressure. The arguments advanced by foreigners to scare us should not be expounded by our officials in this way.”
Institute of Economic Affairs (IEA)
Questioning the Royalty Cap and Windfall Profits
The IEA’s critique centers on the structural limitations of the Minerals and Mining Royalty Regulations, 2025. While the Institute acknowledges that a sliding-scale regime is theoretically superior as it “captures for the state a larger share of revenue when prices rise and reduces the burden on mining companies when prices fall” it finds the 12% upward limit for gold and lithium deeply problematic.
The Institute asks whether the nation is truly content with a fixed ceiling, regardless of how high global commodity prices might soar.
By capping the state’s share, the current framework leaves Ghana vulnerable during “windfall profits” eras.
For minerals other than gold and lithium, the rate remains fixed at a mere 5%, a figure the IEA suggests is insufficient for a nation seeking to exercise true sovereignty over its mineral wealth.
The Institute further dismissed claims from industry players that these regulations would lead to the loss of one million jobs, labeling such projections as “exaggerated, speculative, and not grounded in empirical evidence.”
The Paradox of Concurrent Tax Concessions
A primary point of contention for the IEA is the “fundamental question” of why the government would implement a royalty hike while simultaneously slashing the GSL.
By reducing the levy from 3% to 1% as a “cushion” for investors, the government is perceived to be giving back with one hand what it has taken with the other.
This dilution of fiscal gains suggests that the state’s priority has shifted from revenue maximization to placating multinational mining entities.
When the GSL is weakened, the “cushion” provided to investors comes at the direct expense of the Ghanaian taxpayer and the funding of essential public infrastructure, effectively trading long-term national wealth for short-term investor satisfaction.
Demand for Coherent and Sovereign Fiscal Policy
The Institute of Economic Affairs (IEA) is calling for a “coherent, predictable” fiscal policy that refuses to yield to the “scare” tactics often used by foreign interests to influence domestic legislation.
The Institute maintains that the “arguments advanced by foreigners” to discourage higher state takes should not be echoed by Ghanaian officials. Instead, the focus should remain on ensuring that the mining sector contributes its fair share to the country’s industrial transformation.
To truly benefit from the extractive industry, the IEA suggests that the government must move away from “reactive concessions” and toward a regime where the state retains a larger, uncapped portion of revenues during price booms.
Without such reforms, the “GSL reduction” will continue to be seen as a retreat from the goal of national self-reliance, leaving the country’s mineral wealth to benefit external shareholders more than the citizens of Ghana.
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