IMF Urges Ghana to Cut Ineffective Tax Incentives to Strengthen Revenue Mobilisation
The International Monetary Fund (IMF) has advised the government to reconsider the wide range of tax incentives granted to businesses, warning that many of them are poorly targeted and fail to produce the intended economic gains. Scaling back such incentives, the Fund argues, could significantly boost domestic revenue and improve the overall efficiency of Ghana’s tax system.
Ghana’s tax-to-GDP ratio currently sits at about 13%, well below its potential. The IMF notes that across Sub-Saharan Africa, similar gaps—often more than 5% of GDP—stem from structural challenges, including high levels of informality, weak enforcement mechanisms, and administrative shortcomings.
“In this context, scaling back costly and often poorly targeted tax expenditures could contribute to narrowing the tax gap by strengthening revenue performance and improving the efficiency of the overall tax system”, the IMF said.
The issue of revenue underperformance was echoed in the 2026 Budget Statement presented by the Finance Minister, who highlighted persistent leakages at the country’s ports. He pointed to systemic failures in cargo valuation, classification, and inspection as key factors undermining the state’s ability to mobilise revenue.
Data from 2024 show that while imports worth GH¢204 billion were recorded, less than half—about GH¢85 billion—was deemed taxable. According to the minister, this reflects widespread misclassification and under-invoicing, leading to substantial losses to the public purse.
To address these challenges, government has outlined measures aimed at modernising and tightening port operations. Among them is the deployment of Artificial Intelligence (AI)-driven pre-arrival inspection systems for all cross-border shipments. The technology is expected to detect under-valuation, identify high-risk consignments, and support Customs in combating smuggling and strengthening national security.
Authorities believe that automating these processes will not only enhance trade efficiency but also significantly improve customs revenue collection. The intervention forms part of broader reforms aligned with the IMF’s recommendations to streamline tax incentives, bolster enforcement, and raise domestic revenue.
The IMF maintains that reducing wasteful tax expenditures and improving tax administration remain crucial, especially at a time when access to external financing is tightening. The Fund is urging Ghana and other countries in the region to explore under-utilised areas of tax policy in order to build resilience and better fund essential development priorities.
