Deloitte wants government to diversify its borrowing sources

Minister of Finance, Ken Ofori-Atta

With the country’s debt rising mainly through borrowing from the international capital market (ICM), it has become essential for the government to consider diversifying its sources of borrowing, advised Deloitte, Ghana.

Subsequently, the international accounting and auditing firm described as laudable the government’s decision to temporarily suspend access to debt of ICMs and to resort to national loans via syndicated loans from commercial banks in the country.

In doing so, Deloitte urged the government to ensure that loans taken out have competitive interest rates so as not to aggravate the rise in interest payments.

The country’s debt stands at nearly GH ¢ 400 billion (78 percent of gross domestic product). Government interest charges are expected to represent around 37.3% of revenue in 2022. The increase in interest payments has the potential to limit funds for other critical areas such as capital spending on infrastructure.

Deloitte made the suggestion in its annual report released late last month on the 2022 budget and the government’s economic policy.

“Borrowing from MICs is relatively expensive and has resulted in increased government spending on interest payments.

Government interest spending is expected to account for around 37.3% of revenue in 2022. The increase in interest payments has the potential to limit funds for other critical areas such as capital spending on infrastructure ” , he said in the report.

In this context, Deloitte therefore considered that “the government’s decision to diversify the debt portfolio and access syndicated loans from commercial banks is commendable. However, the government should negotiate competitive interest rates on these facilities in order to reduce the rise in interest payments.

Revenue mobilization

Regarding the country’s revenue mobilization efforts, especially with regard to electronic direct debit (E-Levy), Deloitte in his report said: in particular mobile money services which have strengthened the momentum for financial inclusion.

Notwithstanding the opportunities that this sub-sector presents for the government to rake in the much-needed revenue, it is imperative that it assess the impact, both intended and unintended, of the implementation of the electronic tax. on Retail Electronic Payments and Global Financial Inclusion in the Country. ”

The audit firm said studies have shown that implementing similar digital tax regimes in other countries, for example Kenya, may not significantly broaden the tax base, but rather “reverse the gains on electronic retail payments and financial inclusion ”.

He warned that the imposition of the electronic tax has the potential to discourage the use of electronic payment systems while encouraging a preference for cash and financial exclusion, especially for low-income people.


“We recommend that as the government works to design an implementation framework for the electronic tax, it also learns from the challenges faced by other countries with the imposition of similar digital taxes.

Most importantly, we believe the government is exploring other ways to move the informal sector through the tax net that targets the real income generated by informal sector actors.

He said if the e-tax is implemented, the government might consider making the policy a temporary measure to avoid eroding the gains made in financial inclusion policy.

No consensus on E-levy

The issue of the electronic tax since the budget was tabled in parliament on November 17 has received a lot of mixed reactions, although many prefer it to be done away with.

In the House, MPs are sharply divided, creating a leadership crisis within the legislature.

To this day, it is still unclear whether the 2022 budget was passed or rejected because the two opposing groups in the House took very strong positions.

Last Monday, the finance minister, at a press conference, said the government had yet to take a decision on revising the 1.75% direct debit.

Responding to media speculation on a review of the electronic tax, Mr. Ken Ofori-Atta, said the government was still engaging the minority and other relevant stakeholders and had not yet taken a decision on the review of the e-tax. tax.

“The electronic debit is still 1.75%. We are conducting serious consultations, keeping clear on the tax implications of what it would mean if we were to reduce it.

In view of its serious fiscal implications, we will continue our consultations with the minority and other relevant stakeholders with a view to reaching consensus and returning to Parliament as soon as possible, ”he said.

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