Government has announced its decision to increase the Value Added Tax (VAT) by 2.5 percent.
This will move the tax policy from its current percentage of 12.5 per cent to 15.
Presenting the 2023 budget to Parliament on Thursday, the Finance Minister, said the review is to directly support road construction projects and the digitization agenda.
According to Ken Ofori-Atta, the upward adjustment forms part of the government’s initiative “to aggressively mobilize domestic revenue.”
Among others, the Minister, said the government would fast-track the implementation of the Unified Property Rate Platform programme in 2023.
He also revealed that the E-Levy Act, will be reviewed.
“The headline rate from 1.5% will be reduced to one percent (1%) of the transaction value as well as the removal of the daily threshold,” he divulged.
Government is set to suspend interest payments for domestic bondholders and impose a 30% haircut on foreign bonds.
Speaking exclusively to JoyNews after the presentation of the 2023 budget, Deputy Finance Minister, John Kumah, explained that under the debt restructuring arrangement domestic bondholders will receive zero interest for 2023.
In the second year, they will receive only 5% interest and a further 10% interest in the third year.
Domestic bondholders can only expect to start receiving their full interest in 2026.
The arrangement will not affect the principal.
For foreign bondholders, the government is proposing a 30% haircut on both principal and interests.
According to Mr Kumah, details of the restructuring will soon be placed before investors.
He said the government is hoping to reach an agreement with investors before the end of the year.
He also confirmed that the government will be placing before Parliament in the next few weeks a new law to amend the terms for all government bonds to legalise the restructured arrangement.
Reacting to the details, the Minority Spokesperson on Finance, Dr Cassiel Ato Forson said the NDC minority side will reject any attempt by the government to pass a law to legalize the restructured arrangement.
Government cannot access an International Monetary Fund (IMF) programme approved by the executive board without an arrangement that brings the country’s debt to sustainable levels.
The other Deputy Finance Minister, Abena Osei Asare, who also addressed the press after the budget was read said that investments in Treasury bills will not be affected by the debt restructuring announced by the Finance.
Abena, noted that principals of domestic bondholders or instruments will also not be touched.
This, she said, has been confirmed during the budget presentation by the Finance Minister, Ken Ofori-Atta.
“T-bills are out of the perimeter of the debt operations. It has been stated clearly,” she assured.
She, however, stated that at the end of the debt restructuring, the Ministry will come out with structures and terms that will ensure that the market corrects itself so that a robust country is built.
The Finance Minister during the 2023 Budget reading, announced plans to restructure Ghana’s debt.
According to him, the government will suspend interest payments for domestic bondholders and impose a 30percent haircut on foreign bonds.
