Former Deputy Information Minister under the Mahama administration, Felix Kwakye Ofosu, has urged the government to rescind its decision to raise revenue for the country through the proposed e-levy.

Instead, he has advised government to cut down on its expenditure and invest the savings thereof into developing the country.

"The e-levy, which this government touts as the panacea to all our problems is completely irrelevant as far as resolving the crisis we are in at the moment, is concerned," he said.

He made the assertions on JoyNews' Newsfile, on Saturday, February 5, 2022, where he accused the government of mismanaging the economy.

"It is important to stress that the Ghanaian Economy currently is hanging by a thread and it's no exaggeration to say that it has already collapsed.

"The office of government machinery is receiving about GHC3.2 billion - over 500 million cedis more than they received last year. As I speak to you, our President likes to sit in a $14,000 an hour rented jet at a time when we have a Presidential jet that is fit for purpose. How can you live like an Arabian King, you will not listen to cries and pleas to cut down on this cost and you expect them to pay e-levy which will be taxing people's savings and their capital?" he asked.

He stated that two things have undermined Ghana's economy - unsustained debt overhang and a large budget deficit - of which both result from the decisions of the government.

He added that investors are no longer interested in lending money to the government due to a lack of faith that the country will be able to comply with the terms of payment.

"Government creates the impression that once the e-levy is passed, they'll need something little in order to finance our development, but the crisis we are in is that this government does not have policy credibility, so investors no longer want to lend us anything in terms of financing or lending," he said.

The comment comes in the wake of town hall meetings by the government aimed at sensitising the government on the need to accept the e-levy. It also comes at a time when Ghana's Long-Term Foreign-Currency Issuer Default Rating (IDR) has been downgraded by international rating agencies such as Fitch and Moody.

Fitch downgraded Ghana's IDR to ‘B-‘ from ‘B’ with a negative outlook.

The downgrade of Ghana’s IDRs and Negative Outlook reflect the sovereign’s loss of access to international capital markets in the second half of 2021, following a pandemic-related [COVID-19] surge in government debt.

Moody’s Investors Service (“Moody’s”) also on Saturday, February 5, 2022, downgraded Ghana’s long-term issuer and senior unsecured debt ratings to Caa1 from B3 and changed the outlook to stable from negative.

Moody’s has also downgraded the senior unsecured MTN programme ratings to (P)Caa1 from (P)B3 and the backed senior unsecured debt rating to B3 from B1.

The downgrade to Caa1 reflects the increasingly difficult task the government faces in addressing its intertwined liquidity and debt challenges. Weak revenue generation constrains government’s budget flexibility and tight funding conditions on international markets have forced the government to rely on costly debt with shorter maturity.

Moody’s estimates that interest payments will absorb more than half the government’s revenue over the foreseeable future, which is exceptionally high compared to peers at all rating levels. As a remedy, the government has proposed sharp fiscal consolidation and a switch to borrowings from external partners on more favourable terms.