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Ghana Scraps Power Tax After Public Outcry
Ghana’s government has hit the brakes on a proposed 15% tax on electricity, scrambling to quell public anger that it would worsen the nation’s already dire cost-of-living crisis.
The planned value-added tax (VAT) sparked outrage across the country, with labor unions threatening nationwide protests. Authorities have now put the tax on hold, pledging “extensive dialogue” with stakeholders before proceeding.
This decision comes hot on the heels of a new fuel emissions levy, implemented just days ago, that drew mixed reactions. Critics warned that both taxes would pile pressure on Ghanaians already struggling with rising prices of essential goods like fuel.
Facing mounting public pressure, the Finance Ministry issued a directive to the country’s two main power distributors to suspend the VAT implementation. The move aims to “get the buy-in of industry players and labor unions” and address concerns about the tax’s impact on consumers and businesses.
However, labor unions remain skeptical. The Trades Union Congress (TUC) says they haven’t been officially informed of the suspension and their planned protests for next week are still on. They demand the complete scrapping of the tax, arguing it would burden families and businesses alike.
Ghana’s economy is grappling with its worst crisis in decades. The government, desperate to raise revenue, has secured a $3 billion bailout from the International Monetary Fund (IMF).
The country has also been plagued by power shortages, known as “dumsor,” for years, due to poorly maintained infrastructure and reliance on unreliable gas supplies.
Egypt Raises Minimum Wage by 50% in Bid to Ease Economic Woes
In a move aimed at bolstering social protection and mitigating economic hardship, President Abdel Fattah al-Sisi announced a significant increase in Egypt’s minimum wage. Effective March 2024, the monthly minimum will jump by 50%, rising from 4,000 Egyptian pounds (EGP) to 6,000 EGP (approximately $194). This decision forms part of a broader “urgent social protection package” valued at 180 billion EGP ($5.8 billion).
This announcement comes amidst heightened economic anxieties in Egypt. The Egyptian pound has been under devaluation pressure, with black market rates reaching 71 EGP per dollar compared to the official rate of 30.85. Analysts speculate that a recent central bank interest rate hike might signal an impending devaluation.
To further alleviate financial strain, President Sisi also directed a 33% increase in the tax threshold for all public and private sector employees, rising from 45,000 EGP to 60,000 EGP. Additionally, state workers will receive a wage boost ranging from 1,000 to 1,200 EGP per month.
These measures follow an agreement between Egypt and the International Monetary Fund (IMF) on key components of an economic reform program. This paves the way for finalizing a deal that could potentially expand a $3 billion loan, crucial for supporting Egypt’s struggling economy.
The country has been grappling with a complex economic landscape, characterized by slow growth, foreign currency shortages, and the impact of the Gaza crisis on tourism and Suez Canal revenue. The government hopes that these recent initiatives will provide much-needed relief to its citizens and inject stability into the economic climate.
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