The government’s plan to collect GH¢143.1 billion in taxes for 2024 is at risk due to a potential shortfall of GH¢1.8 billion caused by suspending the 15% VAT on residential electricity users.

If this deficit is not addressed, it could also impact the country’s goal of ending the year with a fiscal deficit of 5.9%, unless spending is adjusted to match expected revenues.

Minister for Finance, Dr. Mohammed Amin Adam, expressed concern, stating, “The amount involved is GH¢1.8 billion, and if you have that shortfall, it will certainly affect your fiscal balances.”

“So there is a need to look at how to fill in that gap. We are having discussions among ourselves on alternative arrangements to fill that gap so we can achieve the fiscal target that we negotiated in the 2024 budget and the IMF program,” he explained.

He mentioned that the ministry would inform the public about the agreed alternative actions, possibly during the upcoming Economic Update session.

Dr. Amin Adam emphasized that the government is dedicated to meeting the fiscal goals outlined in the budget. Therefore, it will persistently pursue other revenue-generating measures to ensure it remains on track with these targets.

“We are committed to collecting the revenues that we have budgeted for. I have recently gone around to engage officials of the Ghana Revenue Authority (GRA) and some customs officials at the Tema port. We are also going round to all the revenue centers to see the conditions under which they work, their challenges, and how we can address them”
Dr. Amin Adam

He stated that the government is actively working to facilitate an environment that enables the Ghana Revenue Authority (GRA) to boost revenue collection.

Moreover, it’s not just about introducing new taxes or raising existing ones, but also about enhancing efficiency to ensure that everyone who should pay taxes does so.

Regarding concerns from the International Monetary Fund (IMF) about the potential GH¢1.8 billion shortfall, Dr. Amin Adam explained, “Certainly, once you agree with the fund to achieve a certain fiscal target based on revenue and expenditure and you have a shortfall in revenue, they will certainly draw your attention to that”.

IMF Open to Alternative Measures and Interventions

During her three-day visit to Ghana, the Managing Director of the IMF, Kristalina Georgieva stated that the IMF respects the government’s right to make such decisions. She stressed that the fund’s priority is to ensure that the program’s goals are achieved.

She highlighted that there are various methods to achieve fiscal consolidation. The IMF is content as long as the government remains committed to achieving debt sustainability and fiscal stability.

“We will continue to have conversations with the government on what it will take to restore macro-economic stability. What we know is that the government cannot spend more than it generates so the government has to make ends meet.”
Kristalina Georgieva

Georgieva said the upcoming review, which starts today, April 2 would present the fund with a good opportunity to engage more on that.

“We have no pre-set decision on how to get it done and are open to discussing it,” she added.

The head of the IMF emphasized that achieving economic recovery in Ghana will require significant sacrifices from all citizens.

Drawing from her own country’s experience, she highlighted Bulgaria’s drastic economic collapse, where inflation skyrocketed by 8,300%. She stressed that the measures taken to restore stability were extremely difficult for most people. However, those efforts yielded remarkable results, with Bulgaria’s income levels quadrupling over the past decade.

She noted that Ghana’s situation is not as dire. She urged Ghanaians to manage their expectations, emphasizing that a strong economy, high living standards, and competitiveness are not achieved overnight but require solid foundations.