President Nana Akufo-Addo’s cabinet has directed Finance Minister Ken Ofori-Atta to formally engage with the International Monetary Fund (IMF) to agree on areas for expenditure cuts.

The directive comes in the wake of government's challenges in implementing the 15 percent Value-Added Tax (VAT) on electricity, amid opposition from organised labour.

The government is considering abandoning the tax measure due to the resistance from labour unions.

Read also: Organised Labour insists on complete withdrawal of 15% VAT on electricity

Speaking to JoyNews, the Deputy Energy Minister Andrew Egyapa Mercer explained that the Finance Ministry aims to negotiate with labour unions to find a mutually agreeable way forward.

He clarified that the Ministry still believes the VAT implementation should occur at some point, stating that the cabinet's decision to engage with the IMF is seen as an effort to explore critical expenditure cuts and find solutions amid the current challenges.

"If this revenue is intended to fund some expenditure item, then a cut in expenditure will mean that you've dealt with the need for the rollout of that particular tax and so let's see how the engagements go.

"Obviously, we are in a difficult situation and I welcome constructive criticism because government can never be perfect.

“You have issues with some decision-making that you roll out but if the criticism is constructive, regardless of what it is you may say that when we were in power, this is what you did to us," Mr. Agyapa said.

He emphasised the importance of engaging with the IMF to navigate the current economic challenges and put the economy back on track for progress and nation-building.

The IMF has also emphasised the importance of Ghana staying committed to its bailout program to fully realize its benefits.

The IMF's Director of the African Department, Abebe Selassie stressed the necessity for Ghana to adhere strictly to the agreed-upon austerity measures to navigate its way out of the economic crisis.

“We just went to the board recently with the first program review and the policies that the government has been putting in place to address the huge imbalances Ghana was facing through last year. 

“The official creditor is signaling that they will provide debt relief consistent with what Ghana needs. So we just went to the board a couple of weeks ago.

“What I can say is that going forward, it will be really important that Ghana continues to implement the program that they have developed as envisaged that is really critical," he said.

He explained that these programs are not designed to be implemented over three or four years, stressing the importance of Ghana sticking to the course and seeing the program being implemented over the next three years.

“So we look forward to continuing to support Ghana with program implementation,” the IMF's Director of the African Department said.