Bussiness
Cost of borrowing to surge as IEA proposes Policy Rate of 20% or 20.5%
Cost of borrowing is expected to go up further, as the Institute of Economic Affairs (IEA) is urging the Bank of Ghana to increase the Policy Rate (PR) by 1.0% or 1.50% to 20% or 20.5%.
Its argument is that the upward adjustment will narrow the inflation-Policy Rate gap, although the real Policy Rate will still remain negative.
In a statement signed by its Director of Research, Dr. John Kwakye, it said furthermore, the adjustment will signal the MPC’s unwavering commitment to fighting the inflation and bring it under control.
“The adjustment will also send the right signal to, and help calm, the markets”, it added.
Furthermore, the policy think tank explained that the next meeting of the MPC in September 2022, when the Committee would have had the benefit of two more inflation readings in July and August, would give it a clearer sense of the trend for it to reposition the PR accordingly.
The Monetary Policy Committee (MPC) of Bank of Ghana will hold its 107th meeting to decide on the Policy Rate (PR) on July 20-22, 2022. Once again, the Committee faces a challenging decision as inflation shot up further to 29.8% in June, the highest in 19 years.
In May 2022, the MPC adjusted its policy rate for the second consecutive time to 19%
“To deal effectively with the current inflation—and to limit the harm that exclusive use of the PR could cause—we have called for the Bank of Ghana and Government to work together to target directly the key inflation drivers, viz. food, fuel, transport and the exchange rate. We have provided detailed suggestions to address these factors in a July 12 Roundtable paper titled: Rethinking Inflation Management in the Wake of Covi-19 and Russia-Ukraine War”, it proposed.
“In major countries such as the US and UK, the governments have made inflation control a top policy priority and are taking measures to complement their central banks’ actions. The same approach is needed in Ghana. Even the IMF that is known not to be a fan of subsidies, has called on member governments to provide food subsidies to their citizens to cushion the cost of living crisis. This call should tell us that new interventions are required in dealing with what is clearly an unconventional-type of inflation that is currently sweeping the globe”, it added.
The Monetary Policy Committee of the Bank of Ghana will begin its quarterly meeting tomorrow, with the primary focus of the committee is to craft a policy to help stem the continuous rise in inflation.
Already, interest rates have remained relatively stable on the money market for the third week running.
Source: Joy Business
Bussiness
Ghana’s GDP shows economy is fast recovering despite DDEP – Finance Ministry
Ghana’s Gross Domestic Product (GDP) indicates a rapid economic recovery despite global challenges and ongoing debt restructuring, according to the Ministry of Finance (MoF).
The Ministry in a statement today indicated that latest data from the Ghana Statistical Service (GSS), cumulative economic growth for the second quarter (Q2) of 2024 reached 6.9%, a notable increase from the 4.7% recorded in the first quarter of 2024.
The MoF statement further noted that, “The economy’s robust recovery is in response to the macroeconomic stability and growth interventions that government is pursuing under our IMF-supported Post Covid-19 Programme for Economic Growth (PC-PEG).”
According to them, the overall real GDP growth for the first half of 2024 rebounded strongly, with year-on-year GDP growth averaging 5.8% for the period, significantly higher than the 2.9% recorded in the same period in 2023.
By Edem Mensah-Tsotorme
Read full statement below
Bussiness
Facebook, Youtube, online trading companies must be taxed – Deputy Finance Minister
The Deputy Finance Minister Dr Alex Ampaabeng, has proposed that online trading companies should be taxed to bolster the economy.
He noted that these companies, both local and international, generate significant revenue from their Ghanaian clients, which underscores the necessity for taxation.
In an interview with Bernard Avle on Channel One TV’s The Point of View, Dr Ampaabeng pointed out various potential revenue sources for Ghana, including online businesses and content creation companies.
He questioned why other national companies operating in Ghana are taxed, but social media platforms like Youtube and Facebook, which run numerous advertisements, are not included in the Ghanaian tax system.
According to him, these social media companies earn profits from the advertisements they display, and online trading companies also generate income from the sale of their products and services.
He mentioned online trading companies such as Jiji, Jumia, and Tonaton, which he believes surpass all physical marketplaces in Ghana in size.
According to him, “I can’t think of a country which has not gotten a digital service tax system of some sort, so Ghana is long overdue. Just to make an example so that people will appreciate where I’m coming from. Go to Youtube and play a video, within one or two minutes, you are going to watch about two, or three adverts.”
“What it tells you is that Facebook or Youtube is making profits right here in Ghana. Go to your Facebook account, and you are going to see a number of adverts on your right, left. What it is telling you is that Facebook is making profits right here in Ghana and not being taxed. Meanwhile, there are companies operating in Ghana, for jurisdiction reasons, of course, that are being taxed,” he said.
The Deputy Minister added that “So then, it comes to the question of the application of our tax laws. Revenues generated in Ghana are subject to taxes. We have Facebook, TikTok and all those players, these are digital platform owners.”
He stressed, “Then we have the digital or market players, here we are talking about individuals who are using the digital platforms. We have Jiji, Jumia, Tonaton, these combined, are bigger than all physical marketplaces in Ghana. And it tells you the volume of transactions, that are going on there.”
He expressed his hope that individuals earning online profits from Ghanaian residents would be taxed.
“There are conversations ongoing, I wouldn’t want to pre-empt anything, maybe in the future, it might not be anytime soon, what I would like to see, is a Ghana where people who are earning all forms of profits in the country are subject to taxes. People who are trading online to Ghanaian residents, people who are generating revenue from Ghana are allowed to pay taxes,” he noted.
Additionally, he proposed a collaboration with the government to curb cybercrime by registering and verifying these online trading companies.
“We can have a system where the government engages these operators, so individuals will submit their Ghana Card and are registered and verified,”he concluded.
Source: Citinewsroom.com
