Despite the agitations by a section of the Ghanaian public, the International Monetary Fund (IMF) has thrown its weight behind Ghana’s newly introduced GHC1 per litre Energy Sector Levy.
The IMF describes the levy as a crucial step towards addressing the country’s fiscal and energy sector challenges.
Reacting to the controversial tax measure during a news conference in Washington, D.C. IMF Director of Communications, Julie Kozack, said the levy will serve as an important mechanism for mobilizing domestic revenue while helping to stabilize the economy.
“This new measure will help generate additional resources to tackle challenges in Ghana’s energy sector. We also believe that this will help bolster Ghana’s ability to deal with the fiscal challenges,” she stated.
The levy, which has sparked public debate and concern over its potential impact on fuel prices and the cost of living, forms part of the government’s broader strategy to clean up legacy debts in the energy sector and consolidate fiscal gains under its IMF-backed programme.
Finance Minister, Dr. Cassiel Ato Forson, reveals the legacy debt in the energy sector has accumulated to the tune of about $3.1 billion, requiring an amount of $3.7 billion to clear.
Despite the concerns, the IMF’s endorsement could ease investor fears and signal to the international community that Ghana remains committed to tough reforms needed to restore macroeconomic stability and debt sustainability.
The move aligns with the Fund’s emphasis on domestic resource mobilization as a sustainable path out of fiscal distress.
Amid the apprehension, President Mahama has pledged to ringfence the proceeds from the levy and vowed to use it transparently to shore up the energy sector, pay off debts to Independent Power Producers (IPPs), and reduce reliance on external borrowing.
The vote of confidence in the levy by the IMF comes as a bolster to the government’s fiscal reforms, which are expected to increase revenue while cutting costs. The success of such fiscal measures could be critical in determining the country’s economic resilience and future development prospects.
