Individuals and businesses need to get ready for a tax increment – Prof Bokpin on IMF programme

Economist Professor Godfred Bokpin has called the general public to prepare for an increase in taxes following IMF’s approval of Ghana’s request for a bailout.

Speaking to JoyNews’ Evans Mensah on Wednesday, he explained that this is because the government will have to meet a tax to GDP ratio during the review of the programme.

“There are targets that we have to meet every six months of the program review. Part of the target may include increasing our tax-to-GDP ratio to let’s say 18%. The strategy in increasing the tax revenue could negatively impact businesses if we don’t adopt optimal tax handles,” Prof Bokpin said.

This comes after the International Monetary Fund (IMF) finally approved Ghana’s Programme request seeking for a $3 billion Balance of Payment support to stabilize the economy.

In a press release by the IMF, they indicated that this decision will enable an immediate disbursement of about US$600 million to Ghana.

“The program is based on the government’s Post COVID-19 Program for Economic Growth (PC-PEG), which aims to restore macroeconomic stability and debt sustainability and includes wide-ranging reforms to build resilience and lay the foundation for stronger and more inclusive growth,” parts of the statement read.

Meanwhile, Prof Bokpin stated that Ghana needs strict governance and productivity-enhancing reforms to complement gains from the International Monetary Fund.

He contends that government has a lot of work to do, in ensuring a robust macroeconomic stability in the short to medium term as the country awaits the first tranche of the $3 billion facility from the IMF.

“What then is important is that how do we complement gains from the IMF, short term usually, by the necessary governance productivity and enhancing reforms that Ghana needs to do?”