IMF Country Report: Proposed Laws, Amendments, and Policies for Ghana
The International Monetary Fund (IMF) has released a report outlining proposed laws, amendments, and policies for Ghana. These proposed changes aim to address weaknesses in the existing systems and promote economic growth and stability. Here are some of the key proposed changes:
Conduct of Public Officers Act
The enactment of the Conduct of Public Officers Act aims to address weaknesses in the existing asset declaration system for public officials. The Conduct of Public Officers Bill, which has been pending before Parliament since 2013, once enacted, is intended to provide a more effective system for monitoring and enforcing asset declarations among public officials.
Amendment of Fiscal Responsibility Act
The proposed amendment to the Fiscal Responsibility Act includes the inclusion of a debt target with a broad coverage to control extra-budgetary spending. The amendment also simplifies the act by focusing on a single operational rule. Additionally, the amendment further details the escape clause and correction mechanisms and reforms the existing fiscal Advisory Council to bolster credibility of macro-fiscal projections and ensure the fiscal rule is adequately implemented and enforced.
Revision of BoG Act
The proposed revision of the Bank of Ghana (BoG) Act aims to strengthen central bank independence and mitigate fiscal dominance. The amendment includes a stricter limit for monetary financing, mechanisms to monitor and enforce compliance, and a clear definition of emergency situations under which the limit can be temporarily lifted.
Review of Local Content Legislation
The review of local content legislation aims to encourage Foreign Direct Investment (FDI) and ensure that any revision of surrender/repatriation requirements in the export sectors is consistent with the long-term goal of promoting FDI. Specific measures target improvements to export competitiveness, reduction of trade barriers, implementation of AfCFTA, and establishment of a one-stop shop for investors.
The proposed revenue mobilization measures include the removal of VAT exemptions, phasing out of tax holidays and exemptions, and strengthening safeguards against profit shifting. Additionally, the reduction of customs exemptions, progressive increase in personal income tax, automatically adjusting fuel levies by exchange rate movement or inflation, adoption of new fiscal regime for extractive industry, accelerating procurement of integrated tax system, and expanding e-VAT invoicing to cover all large taxpayers by mid-2023 are included.
Public Financial Management
The proposed public financial management measures include the integration of central government expenditure into the budget planning and accounting systems, quarterly tariff adjustments, gradual
reversal of recently imposed surrender requirement on gold exports to BoG to bolster FX liquidity in the banking sector.
AML/CFT Framework Upgrade
The proposed upgrade of Ghana’s AML/CFT framework includes capacity building of all reporting entities on various AML/CFT related areas, strengthening of transparency of Beneficial Ownership (BO) of legal entities in Ghana, providing access to the BO register to all accountable institutions and competent authorities, and complementing the BO registry with a requirement for companies to know their BO and strengthen Customer Due Diligence (CDD).
Other proposed changes include the preparation and publishing of annual tax expenditure reports to promote accountability in revenue management, publication of new policy on procurement of new Independent Power Producers (IPPs), development and operationalisation of framework to guide the grant of energy sector subsidies, expansion of the scope of Living Empowerment Against Poverty (LEAP) policy, and review of government flagship programs.
The proposed upgrade to the Financial Sector includes provision of liquidity support to Banks to ensure financial sector stability following the domestic debt exchange, temporary regulatory forbearance including lower cash reserve requirement for banks and adjusted capital requirements for banks and financial institutions, development of a Ghana Financial Stability Fund (GFSF) to provide additional support to the financial sector, and submission of time-bound plans by banks and NBFIs to rebuild capital. The Government however notes that the regulatory forbearances introduced will be lifted as soon as possible.
The proposed laws, amendments, and policies for Ghana will have an impact on various industries and sectors in the country. Here are some of the industries or sectors that are likely to be most affected:
1. Mining Sector: The gradual reversal of recently imposed surrender requirement on gold exports to BoG may impact businesses in the mining sector.
2. Financial Sector: The proposed upgrade of Ghana's AML/CFT framework may impact businesses in the financial sector. The capacity building of all reporting entities on various AML/CFT related areas and strengthening of transparency of Beneficial Ownership (BO) of legal entities in Ghana may lead to increased compliance costs for financial institutions.
3. Import and Export Sector: The proposed revenue mobilization measures, including the reduction of customs exemptions and the removal of VAT exemptions, may impact businesses in the import and export sector. This may lead to increased compliance costs and reduced profitability.
4. Energy Sector: The proposed policies for the energy sector, including the publication of a new policy on procurement of new Independent Power Producers (IPPs) and the development and operationalization of a framework to guide the grant of energy sector subsidies, may impact businesses in the energy sector.
5. Government Contractors: The proposed public financial management measures, including the integration of central government expenditure into the budget planning and accounting systems and quarterly tariff adjustments, may impact businesses that rely on government contracts or subsidies.
6. Investors: The review of local content legislation to encourage Foreign Direct Investment (FDI) and ensure that any revision of surrender/repatriation requirements in the export sectors is consistent with the long-term goal of promoting FDI may benefit businesses that are looking to invest in Ghana.
Overall, the proposed changes will impact various industries and sectors in Ghana.
We will continue to monitor these developments and provide updates on any significant changes.