- The African Union has projected that Africa could lose about $500 billion in tax revenue due to the outbreak of the coronavirus
- The AU added that there is also the possibility of a 30% fiscal loss and this could leave numerous African countries broke
- Reports emerging suggest that increased imports in Africa have led to an increase in tax revenues from duties on goods and services
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A new African Union (AU) report has revealed that Africa is likely to lose an estimated $500 billion in tax revenue due to the coronavirus epidemic.
The report also shows a possible 30% loss of fiscal revenue for the same reason, leaving African countries at the mercy of international borrowers.
YEN.com.gh understands that the report also analyses the impact of the pandemic and shows that several countries could end up with increased debt.
READ ALSO: COVID-19: IMF predicts global economy would shrink by 3% in 2020
High imports in Africa have led to an increase in tax revenues from duties on goods and services.
This, per the report, accounted for 53.7% of tax revenues in the year 2017, but the situation has changed as a result of declines imports, following the outbreak of COVID-19.
Business and Financial Times reports that Africa’s tax to GDP ratio stands at a low rate of 17.2%, compared to that of Latin American countries with 22.8% and OECD countries with 34.2%.
YEN.com.gh earlier reported that the AU hinted of an estimated $270 billion loss in revenue due to the COVID-19.
The AU added that the continent’s economic growth could contract to as low as 0.9% from 3.4% on average.
It explained that the loss could result in a disruption of the world’s economy through global value chains, the abrupt falls in commodity prices, fiscal revenues and the enforcement of travel and social restrictions in several African countries.
READ ALSO: COVID-19: Reports suggests African countries may take 3 years to fully recover
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