President John Dramani Mahama has disclosed key proposals his administration presented to the International Monetary Fund (IMF) during their recent engagement, aimed at addressing Ghana’s economic challenges and ensuring the success of the ongoing Extended Credit Facility (ECF) arrangement.
The ECF, approved on May 17, 2023, provides Ghana with a total of $3 billion over a three-year period to support economic stability and growth.
Speaking to Bloomberg TV at the Munich Security Conference last Monday, President Mahama outlined the discussions held with the IMF, particularly focusing on tax rationalization, debt management, and fiscal prudence. His remarks shed light on the government’s strategy to navigate the current economic landscape while maintaining a strong partnership with the IMF.
Tax rationalisation
One of the key issues raised by the Mahama administration during the IMF engagement was the need for tax rationalisation. President Mahama emphasised that the previous government’s approach of imposing multiple taxes had led to diminishing returns, with higher taxes resulting in lower revenue collection.
“Because of the target of achieving 24 percent revenue to GDP by 2028, the program required that revenue should continue increasing at a certain rate,” President Mahama explained.
“Unfortunately, what the previous government had done was just to slap on more taxes, and we had gotten to a stage where the more taxes that were put on, the less revenue that came in. And so it’s necessary for us to look at the whole tax handle, rationalise them, make them more transparent, easy to understand, so that we can have better compliance.”
The President revealed that the IMF has agreed to provide technical assistance to support the government’s efforts in rationalising the tax system, ensuring it is more efficient and easier for citizens and businesses to comply with.
Debt restructuring and fiscal prudence
President Mahama also addressed the challenges posed by Ghana’s debt restructuring programme, particularly the significant repayments due this year. He noted that the government has reactivated the sinking fund to manage domestic debt repayments, which exceed $15 billion in 2025.
“We also have the issue of the debt restructuring and humps that have been created this year, we have to pay in excess of 15 billion (dollars) on the domestic debt exchange,” he said. “So what we’ve done is to reactivate the sinking fund and put more resources into it to take care of the repayments that have to be made this year.”
The President reiterated his administration’s commitment to fiscal discipline, emphasising the need to cut wasteful expenditure and reallocate resources to priority programmes. “We must be more prudent in our handling of our finances, we must also look on the expenditure side and see how we can cut waste and also shift resources to more priority programmes,” he stated.
No immediate plans for programme extension or additional funds
When questioned about the possibility of extending the IMF programme beyond its current end date of May 2026 or seeking additional funds, President Mahama clarified that while these options are not off the table, the government’s immediate focus is on adhering to the existing programme.
“We’ve not talked about an extension of the program. We are determined to continue with this program,” he said. “If it’s necessary to look at additional funds or to extend the program, we’ll look at it, but for now we are determined to continue on this trajectory.”
Upcoming budget and IMF review
The President also highlighted the upcoming budget presentation in March, which will incorporate recommendations from the IMF’s recent staff mission. The fourth review of the IMF programme is scheduled for April, and the government aims to align its fiscal policies with the IMF’s guidance.
“The next review, which will be the fourth review, is due in April, but before that, we’ll present the budget in March,” President Mahama noted. “So the budget will take into focus some of the issues that have come out from the staff mission. We’re hoping to receive the aid memoir today or tomorrow, and looking at the issues that IMF raises, we will incorporate them in the budget.”
President Mahama expressed optimism about the government’s relationship with the IMF, describing it as “cordial.” He emphasised the importance of maintaining this partnership to ensure the successful implementation of the ECF programme and the broader economic recovery agenda.
