International Monetary Fund says 40% of GH¢1 tax revenue collected in Ghana goes to settle interest payments

The International Monetary Fund (IMF) has disclosed that 40 percent of every 1 cedi of tax revenue collected by the government of Ghana goes to settle interest on the country’s debt.

IMF Chief Economist, Gita Gopinath

According to the fund, the savings made from this could then help the government channel these funds on very important infrastructure projects as well as social projects.

“If you reduce debts, obviously, that move would help direct the funds to other crucial areas,” the Fund noted.

The Assistant Director at the IMF ‘s Fiscal Affairs Department, Catherine Pattillo said this while she spoke with Accra based JoyBusiness.

She noted that the development calls for some drastic measures to try to control the debt situation in Ghana.

The Assistant Director further added that “the government should explore some expenditure cuts, especially in non-essential areas to help with the situation as well as improving upon tax compliance measures and widening the tax net to help the situation.”

She then said there is some sought of arrangement with the government on some measures over the next five years that would help anchor debts on a sustainable path.

Ghana’s debt

 A recent financial and economic data from the Bank of Ghana has shown that Ghana’s total debt stock ending July this year stood GH¢205 billion. The 2019 budget also puts the country’s interest payments at GH¢18. 6 billion.

A further breakdown of government’s expenditure based on the budget shows that it plans setting aside some GH¢22 .8 billion as total compensation for public sector workers.

Grants to others will be about GH¢13.7 billion, when it comes to capital expenditure, the government is hoping to spend about GH¢8.5 billion by the end of December 2019.

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