The Electronic Transaction Levy is expected to anchor the country’s revenue outlook, but there is uncertainty regarding its performance, Databank Research has disclosed in its latest Ghana Markets Review and Outlook report.

The report said the uncertainty surrounding Parliamentary approval and potential behavioral changes in the use of the digital payment ecosystem pose a downside risk to the expected yield.

The projected revenue from the e-levy is ¢6.96 billion, representing 46% of the new revenue expectation of ¢15 billion.

“Against this backdrop, we view the extra revenue expectation of ¢15bn and the total revenue target of ¢100.5bn as quite ambitious, with a risk of budget under-performance in 2022.”

“However, stricter enforcement of the Ghana Integrated Financial Management Information System (GIFMIS) could strengthen the expenditure controls and support budget performance”, it said.

Fiscal outlook

It forecast an overall budget deficit (including bailout costs) to range between 8.2% and 9.2% to Gross Domestic Product.

“The government expectedly signaled a faster reduction in the 2022 deficit. However, the underlying revenue assumptions appear doubtful. Given the steep climb in the debt-to-GDP ratio (78%) and the debt service-to-revenue ratio (73% as of September 2021), a faster compression in the budget deficit is inevitable”.

Also, it said a stronger push for revenue remains necessary to improve the debt service metrics. “However, we believe the Treasury's revenue growth target of 43% in 2022 appears quite bullish compared to the historical growth trend of 16% (2014 – 2020) and 18% (excluding 2020). Given that the Treasury has missed its revenue target by an average of 5.0% per year between 2016 and 2020, we view the target for 2022 as ambitious.”

Fast forward, persistent revenue shortfalls remain the bane of fiscal consolidation, adding, the government signalled a steady pace of reduction in the budget deficit to 9.4% of GDP in 2021 (vs 11.7% in 2020), excluding bailout costs.