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E-levy: Convert MoMo accounts into bank accounts

And slap 5% turnover tax on account holders without TIN

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MoMo accounts, E-levy, Newscenta, bank accounts, turnover tax, TIN,

David Ofosu-Dorte, Chairman of AB & David Africa is of the view that, instead of the introduction of the Electronic Transactions Levy (E-Levy), MoMo accounts should have been used to open regular bank accounts and bring the unbanked into the banking ecosystem.

He argued that this is doable since all Mobile Money accounts have a Ghana Card database of the holders.

Ofosu-Dorte made the call while delivering the 3rd Constitution Day Public Lecture in Accra.

It is organised by UPSA Law School in collaboration with OneGhana Movement, a thought leadership and social action Not for Profit organization.

It was under the theme, “The 1992 Constitution – A fundamental law for our prosperity or a well crafted guide for our economic doom.”

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Ofosu-Dorte explained that government should then introduce 5% turn over tax to be charged on all the bank Accounts created for which the owners do not already have Tax Identification Numbers (TIN).

The business lawyer with a special focus on Africa transactions and projects stated that the 5% turn over tax will be charged on total amount channeled through such accounts.

MoMo accounts, E-levy, Newscenta, bank accounts, turnover tax, TIN,

Providing further details, Ofosu-Dorte  said persons who feel the pinch of the 5% turn over tax will acquire TIN.

Buttressing his position, he noted that such a move will help the Ghana Revenue Authority (GRA) to expand the tax net which is needed to increase revenue generation.

On 17th November 2021, the Minister for Finance announced during the presentation of the 2022 Budget Statement and Economic Policy of Government to the Parliament of Ghana, the introduction of an “Electronic Transaction Levy” or “E-Levy” of 1.75% on electronic transactions above GH₵100 per day to take effect from February 1, 2022.

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In March 2022, Parliament passed the Electronic Transfer Levy (Amendment) Bill, 2022 to improve tax revenue mobilization by tapping into fast-growing digital financial services.

Implemented in May 2022, with a modified phased approach where the charging entities temporarily used their own systems to assess and charge the Levy, in July same year, the next phase saw the introduction of the Ghana Revenue Authority (GRA) Common Platform for the assessment of the levy.

The government received several proposals for the review of the levy and worked with stakeholders to evaluate its general impact to decide on the next line of action.

The performance of the policy did not meet expectations because of its rate, which the public thought was too high.

As a result of consultations with stakeholders, the rate of the levy was reduced to one per cent of the transaction value.

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In December 2022, the bill to amend the Electronic Transfer Levy Act, 2022 (Act 1075) to reduce the levy on electronic transfers from 1.5% to one per cent was passed.

Finance

Ofori-Atta appeals to Parliament to approve revenue measures

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Ofori-Atta, Newscenta, revenue measures, debt restructuring, parliament,

Finance Minister Ken Ofori-Atta has informed parliament of his intention to present necessary fiscal adjustments to the house in august after the debt operation is completed.

Outstanding revenue mobilisation bills

Already, he said the Income Tax (Amendment) Bill, Excise Duty & Excise Tax Stamp (Amendment) Bills as well as the Growth and Sustainability Levy Bill, are outstanding in Parliament.

According to him, the consideration and approval of fiscal measures by Parliament are critical for recovery from the current economic crisis.

Facilitating IMF Board approval

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The Minister therefore entreated Parliament to prioritise the approval of the outstanding revenue mobilisation bills to facilitate the Board Approval for International Monetary Fund (IMF) Programme staff level agreement by the end of March, 2023.

“We are still counting on you for the passage of all the outstanding revenue Bills which are necessary for effective Budget Implementation as well as boosting our efforts at increasing our Tax-to-GDP from less than 13% to the sub-Saharan average of 18,” he stated.

Expected impact of IMF Board approval

He is confident IMF Board approval will restore macro-economic stability, ensure debt sustainability as well as provide critical social protection for the benefit of Ghanaians.

Factors that impacted economy negatively

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COVID-19, Russia-Ukraine war, soaring energy and food prices, higher interest rates, a strong dollar and a global slowdown negatively affected the economy.

Ghana seeking $3 billion loan

Ghana and the International Monetary Fund (IMF) have reached staff-level agreement on economic policies and reforms to be supported by a new three-year arrangement under the Extended Credit Facility (ECF) of about $3 billion.

But, the IMF has made it clear that the Board approval of the deal is contingent on a successful debt exchange programme.

Broader govt response strategy

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Addressing Parliament on the ongoing debt restructuring efforts, Ofori-Atta explained that debt operations are a composite part of a broader government response strategy for addressing the current challenges.

While being optimistic about IMF programme to boost confidence in the economy, he emphasized that complementing it with enhanced domestic mobilisation efforts is critical.

4 out of 5 agreed Prior Actions in the Staff Level Agreement

The Finance Minister averred that the passage of the Bills will enable government to complete four out of five agreed Prior Actions in the Staff Level Agreement.

Agreed Prior Actions already implemented

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He noted that tariff adjustment by the Public Utilities Regulatory Commission (PURC), Publication of the Auditor-General’s Report on COVID-19 Spending, and Onboarding of Ghana Education Trust Fund (GETFund), District Assemblies Common Fund (DACF) and Road Fund on the Ghana integrated financial management information system (GIFMIS) have all been completed.

International and domestic bond markets are shut

Ofori-Atta reminded the legislators that the international and domestic bond markets are shut for the financing of government’s programmes, forcing government to rely on the Treasury Bills and concessional loans as the primary sources of financing for the 2023 fiscal year.

Therefore, he called on Parliament to support the government’s financing requests to ensure a smooth recovery from the economic challenges.

He thanked everyone who tendered and supported the Domestic Debt Exchange programme saying “It is a truly remarkable act of sacrifice in our nation’s history. We thank those who heeded our clarion call and took the selfless, patriotic decision to participate. Your names and deeds will never be forgotten. Your timely support is deeply appreciated,”.

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He is confident that the programme government has set out for this year, supported by Parliament, will get Ghana out of the economic crisis that has hit the economy since Covid-19.

Inflation interest and exchange rates to stabilise

He hopes for stability in the exchange rates, inflation and interest rates, bringing businesses and families some respite.

Suspension of payments of interest on foreign debt

Government also announced a suspension of all debt service payments for certain categories of external debt, pending an orderly restructuring.

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International bondholders

Ofori-Atta revealed that Ghana initiated discussions with representatives of international bondholders and their Advisors.

According to him, substantive discussions are due to start with them in the weeks to come.

G-20 Debt Treatment initiative

Ghana officially asked its bilateral creditors for a Debt Treatment initiative under the G-20 Common framework.

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Negotiations with commercial creditors underway

The Finance minister said the process of negotiations have started in good faith with commercial creditors.

Ofori-Atta stated that two preliminary discussions and exchange of information have started on a good footing with representative committees and advisors.

Creditor Committee to assess Ghana’s request

According to him, the members have indicated their commitment to establish a Creditor Committee to assess Ghana’s request for debt treatment under the Common Framework by end February, 2023.

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Finance

IMF assigns resident financial supervision adviser to BoG

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Financial adviser, BoG, Newscenta, banking sector supervision, IMF,

The International Monetary Fund (IMF) has assigned a Resident financial sector supervision adviser to the Bank of Ghana (BoG) to provide technical assistance and help build the capacity of the banking supervision function.

The appointment was at the request of Bank of Ghana with full funding from Switzerland’s State Secretariat for Economic Affairs (SECO).

Mr. Leonard Chumo, the Resident Adviser, started his assignment at the Bank of Ghana on February 6, 2023, and was expected to stay for three years.

A statement issued by BoG in Accra said the Adviser’s placement was a continuation of cooperation in this area between the Bank, the IMF and SECO, that started as early as in 2015 and had already seen the assignment of a previous Adviser until 2018.

It said achievements from the past collaborative efforts include the passage of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), the development and issuance of the Corporate Governance Directive 2018, and the Capital Requirement Directive 2018.

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Mr Chumo, brings first-hand knowledge of supervisory work from leading central banks as well as previous technical assistance experience in the Western Africa region.

The statement said among others, he would support the implementation of Pillar two and three of the Basel II/ III capital frameworks, as well as strengthen the Risk-Based Supervisory framework at the Bank of Ghana.

The Bank commended the management of SECO for the continued funding of Long-Term Technical Experts from the IMF to the Bank.

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Finance

Govt pledges to pay coupons, principals on all maturing bonds  

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Government has assured all bondholders, including those who self-exempted from the voluntary Domestic Debt Exchange Programme (DDEP) that it will honour all coupon payments and maturing principals when due.

Payment of coupons and principal for bonds that matured since   February 6 to date (herein referred to as ‘Due Bonds’ remain outstanding.

Bondholders want government to make payments not later than Friday, February 17, 2023.

A statement issued by the Finance Ministry indicates that more than 80% bondholders participated in its $137 billion DDEP.

“The DDEP closed on Friday February 10, 2023, with over 80% participation of eligible bonds,” it said.

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The Finance Ministry pledged to honour all coupon payments and maturing principals in addition to commitments to further streamline Government’s expenditures.

“We would like to stress that, all Individual bondholders, especially our Senior Citizens, should rest assured that their coupon payments and maturing principals, like all Government bonds, will be honoured in line with Government’s Fiscal commitments.

“The Government would like to reassure all individual bondholders who elected not to participate that your coupon payments and maturing principals, like all Government bonds, will be honoured in line with Government fiscal commitments,” it added.

Government reiterated that the DDEP had been executed to help protect the economy and enhance Ghana’s capacity to service its public debts effectively, as its debt had become unsustainable.

The alternative for not executing the DDEP would have brought grave disorder in the servicing of our national debt and exacerbated the current economic crisis.

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It expressed gratitude to bondholders for the overwhelming participation, adding that their support and contributions had gotten Ghana much closer to securing the International Monetary Fund (IMF) programme.

There are fears that those who opt against signing up are not guaranteed market liquidity for the old bonds, because they are likely to become less tradeable on the secondary market compared with the new bonds.

On the other hand, individuals who sign up for the new bonds will have more certainty even in a changing economic landscape.

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