tax hikes - Weak revenue generation leads the government to curtail some spending in 2022

Target resilient customer segments and emphasize your value proposition to public sector clients

MNCs exposed to public sector demand should plan for weakness through at least 2023. Firms selling directly to the public sector should emphasize the ability of their offerings to help the government achieve long-term cost efficiency in its service delivery. More broadly, companies should target customer segments that will be more resilient in the economic slowdown—for example, the ICT and manufacturing industries, and higher-income consumers in commercial centers such as Accra, Tema, and Kumasi. Lastly, firms should be alert to tax hikes in H2 2022 and in the 2023 budget, particularly those selling products that are likely to attract sin taxes.


In Ghana’s 2022 mid-year budget review, in late July, the government downwardly revised its 2022 forecasts for GDP growth (from 5.8% YOY to 3.7% YOY), public revenues (down by 3.7%), and public expenditure (down by 1.3%). Just before the review, the government requested an IMF bailout amid mounting fiscal pressures. The public debt-to-GDP ratio reached 78.3% in June 2022, the budget deficit for January–May 2022 was 5.0% of full-year GDP, and authorities’ projections for debt interest payments were revised up by 10.5%. The review announced a re-introduction of tolls on new roads (originally removed in the 2022 budget); upcoming tax amendments for e-commerce, gaming, and betting; and a new electronic invoicing system (e-VAT).

Our View

The changes to tax policy, including the reversal on road tolls, highlights the government’s urgent need to boost its revenues to address its fiscal problems. More tax increases are likely through 2023, and the hikes on gaming and betting suggest that other sin-tax hikes (for example, on sweets, sugar-sweetened beverages, or alcohol) could be within the government’s sights in the next budget, because they are relatively easy to justify. The country is not expected to default on its debts—which would suddenly collapse demand. Rather, real government spending will stagnate in 2023 (following a decline in 2022), as the government tries to win over the IMF. Still, plans to introduce the e-VAT highlight potential public sector demand opportunities for firms that can help the government improve revenue collection or reduce its costs.

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