- Kojo Oppong Nkrumah has said that the 1% COVID-19 health levy will be used in paying the cost incurred for the free water and electricity package
- President Akufo-Addo in April 2020 during the lockdown announced the package for the less privileged
- Caretaker Finance Minister said the fiscal impact of the pandemic on the country was Ghs19billion
Information Minister, Kojo Oppong Nkrumah, has justified the introduction of a 1% COVID-19 health levy on VAT, saying Ghanaians will have to pay for the free electricity and water introduced by the Akufo-Addo administration in 2020.
Caretaker Finance Minister, Osei Kyei Mensa-Bonsu, said the levy was part of measures aimed at rebuilding the country’s economy following the devastation it suffered due to the global coronavirus pandemic.
President Akufo-Addo announced a free utility package for the vulnerable in the country to lessen the pandemic’s negative impact following a lockdown in Accra and Kumasi.
The fiscal impact of the pandemic on the Ghanaian economy was Ghs19.7 billion, Mensa-Bonsu said when he presented the 2021 Budget Statement.
Speaking on Joy News’ PM Express on Monday, March 15, 2021, Nkrumah said when the president stated that electricity was free, it did not mean that the Independent Power Producer was “also going to say because the president has said free electricity, I won’t charge for it.”
He said: “It was free to the people of Ghana at the time.”
He said the Ghs19billion lost to the pandemic must be recouped at some point and the liabilities “we have incurred have to be paid for.”
He said the country cannot always borrow her way out of economic challenges, thus the tweaking of the domestic resource mobilisation.
Caretaker Finance Minister, Mensa-Bonsu, who is also the Minister for Parliamentary Affairs said Ghana’s total public debt increased from Ghs122billion to Ghs291.6billion as of the end of December 2020.
He attributed the ballooning public debt stock to the current coronavirus pandemic, the banking sector cleanup exercise among others.
According to him, the fiscal impact of the coronavirus pandemic on the Ghanaian economy was Ghs19.7 billion, that of the financial sector clean-up was Ghs21billion with the cost of excess capacity charges to IPPs standing at Ghs12billion.
But for these factors, the country’s public debt would have been hovering around Ghs238.9billion representing 58.7% of GDP, he stated.
“Despite the impact of COVID-19, the rate of growth of the public debt has been lower than what previous governments recorded,” he stated.
He said between 2004 and 2008, Ghana’s debt stock increased by 30% under the Kufuor-led NPP Administration.
Between 2008-2012, the debt stock jumped to 269% under the Mills NDC administration and 243% between 2012 and 2016 under the Mahama NDC government, and between 2016 to 2020, the country’s debt stock has risen to 137% under the Akufo-Addo administration.
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