Ghana: Bonds Rally After E-Levy Passage in Parliament

Ghana’s recent passage of the controversial e-levy tax appears to be having a bullish effect on its investment outlook as bonds have experienced a bounce following parliament’s approval this week. The country’s bonds sold off sold-off from 85-90 cents on the dollar to around 60 cents.

Previously the yield on the country’s $1 billion bond maturing in 2026 fell for the sixth straight day. However, as Finance Minister Ken Ofori-Atta announced austerity measures meant to stabilize Ghana’s faltering economy, investors have been reassured that the country is on the right track to economic recovery.

While the e-levy which will collect 1.5% of every digital transaction in Ghana has not been widely popular among Ghanaians, the government believes it places the country in a position where every citizen pays a fair share to contribute to the economy and expects it to boost revenue to about 15.4% of GDP by the end of 2022. Earlier this week, legislators passed the bill as members of the opposition party who are against it, staged a walkout. This was months after a fight broke out on the floor of parliament between proponents and critics of the e-levy tax.

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In his address earlier this week, Ofori-Atta announced that the government has also decided to reduce the rate of the levy from 1.75% of the transfer to 1.5% of the transfer, insisting that the objective of the bill was to broaden the tax of the country and impose a levy on electronic transfers to enhance the government’s drive for revenue mobilisation.

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