IMF Backs Mahama Administration’s GH¢1 Increase in Fuel Tax
- The International Monetary Fund is backing the GH¢1 increase per litre in taxes on fuel products
- The fund said the increase was a strategic measure aligned with the country’s fiscal goals under the Extended Credit Facility programme
- The government said the tax increase is needed to support the clearing of the $3.1 billion energy sector debt
Ghana’s top stories, now easier to find. Discover our new search feature!
The International Monetary Fund (IMF) has endorsed the GH¢1 increase per litre in taxes on fuel products.
Speaking at a press briefing, Julie Kozack, Director of the IMF’s Communications, said the increase was a strategic measure aligned with the country’s fiscal goals under Ghana's ongoing IMF Extended Credit Facility (ECF) programme.
Source: Getty Images
The levy is aimed at addressing long-standing debt and financial shortfalls in the energy sector.
In line with comments from the government, Kozack said this revenue measure, set to take effect from June 16, will play a crucial role in helping Ghana tackle structural issues in the energy sector.
“On the fuel levy, what I can say is that this is a new measure that will help generate additional resources to tackle the challenges in Ghana’s energy sector, and it is also going to bolster Ghana’s ability to deliver on the fiscal objectives under the programme."
The government said the tax increase is needed to support key procurement for power supply and is also necessary to clear the alarming $3.1 billion energy sector debt.
During debate on the amendment in Parliament, Finance Minister Cassiel Ato Forson said the amendment for the increase would raise additional revenue to fund the needs in the power sector.
The government had planned to implement the tax from June 9, but protests from the Chamber of Oil Marketing Companies prompted the postponement.
IMF concerned with fiscal performance
Despite the positive developments noted in Ghana's recent fiscal performance, the IMF earlier said there was a sharp decline in the programme's performance toward the end of 2024.
It noted fiscal slippages ahead of the general elections while inflation overshot programme targets and several key reforms were delayed.
“Inflation exceeded program targets. Several reforms and policy actions were delayed across the fiscal, financial, and energy sectors.”
Source: Getty Images
Ghana saw 5.7% GDP growth in 2024. The government ran to the IMF in May 2023 for a $3 billion bailout. The Akufo-Addo administration defaulted on its internal and external debt.
In April, the government and the IMF reached a staff-level agreement on the fourth review of Ghana’s three-year Extended Credit Facility.
The agreement will grant Ghana access to approximately $370 million in financial support when approved.
Bawumia slams Mahama government over increased tax
YEN.com.gh reported that Former Vice President Dr Mahamudu Bawumia criticised the government for raising the tax on petroleum products.
Bawumia also accused the Mahama administration of campaigning on deceptive promises because of the introduction of what he called a dumsor levy.
He believes this increased tax is more costly than the scrapped Electronic Transfer Levy.
Source: YEN.com.gh
