Ghana to Slash Top Income-Tax Rate, Exit IMF Bailout by Year-End

(Bloomberg) -- Ghana plans to cut its top income-tax rate and is on course to exit its almost $1 billion bailout program with the International Monetary Fund by the end of this year as the West African nation’s economy is on track to meet its targets.

Gross domestic product using the new base is on track to expand 5.6 percent this year and the nation will probably meet its fiscal-deficit target of 3.7 percent of GDP for 2018, Finance Minister Ken Ofori-Atta told lawmakers Thursday when presenting the 2019 budget proposals in the capital, Accra.

Key Insights:

  • The government wants to cut the tax rate for people earning more than 20,000 cedis monthly ($4,100) to 30 percent from 35 percent, after introducing the higher rate for those earning 10,000 cedis in August.
  • It proposes not to tax minimum-wage earners.
  • Gross domestic product will probably expand 7.6 percent in 2019 and has set a target of average annual expansion of 7 percent in each of the three years through 2022.
  • Total revenue, grants seen at 57.8 billion cedis in 2019 from projected 46.8 billion cedis for 2018.
  • Total spending for 2019 seen at 73.4 billion cedis.
  • Nation projects overall budget deficit of 14.5 billion cedis, or 4.2 percent of GDP.
  • The government plans to issue as much as $3 billion in sovereign debt to finance infrastructure and for liability management.
  • On the country’s plan to issue 100-year debt, Ofori-Atta said Ghana will sell longer-term debt either as “green bonds or Eurobonds on international capital markets” and set up a so-called Sovereign Century Fund for bilateral investment partners.

©2018 Bloomberg L.P.