(Ecofin Agency) - Last year, the Ghanaian government failed to meet its budgetary targets due to the Covid-19 pandemic. The various coping measures initiated by the government have further widened the public debt. By 2022, the authorities plan to leverage the e-payment segment to lessen the burden.
In Ghana, the government imposes a 1.75% tax on electronic financial transactions. The Minister of Finance Ken Ofori Atta (pictured) announced it last week during the presentation of the FY2022 state budget. He said the levy covers all electronic transactions, including mobile money, bank transfers and other remittances, merchant payments.
According to the official, this levy will “widen the tax net and rope in the informal sector”. It will officially come into effect on January 1, 2022. It will be borne by the sender, except for inward remittances, which will be borne by the recipient.
In an interview with ghanaweb.com, Charles Adu, the national public relations officer of the Mobile Money Agents Association, said this is a strategy to transform Ghana's economy into a cashless society.
During the Covid-19 crisis, the Ghanaian government adopted several fiscal policies to assist its populations. This resulted in an increase in total public debt and a sharp decline in revenue collection last year. Overall revenue in 2020 declined by 11.93 billion cedis ($1.9 billion), or 3.1% of GDP, while total expenditure increased by 14.08 billion cedis (3.7% of GDP). As a result, the budget deficit reached 11.7% of GDP against a target of 4.7% of GDP.
The pandemic, coupled with the government's efforts since 2018 to promote digital payment, has increased the volume of electronic transactions. The total value of e-transactions for 2020 was estimated at over 500 billion cedis compared to 78 billion cedis in 2016. According to Ken Ofori Atta, the money raised will be used to support entrepreneurship, youth employment, cybersecurity, and digital and road infrastructure development, among other things.