Understanding GRA's revenue situation
Recent reports about the Ghana Revenue Authority (GRA) losing 30 per cent of its revenue due to cedi appreciation have understandably confused many Ghanaians.
How can something good for our economy—a stronger cedi—hurt government revenues? Let me explain this apparent contradiction.
The issue is purely technical and temporary. Import duties at our ports are calculated in US dollars, but collected in cedis.
When our currency strengthened from GH¢16 to GH¢10 per dollar, the same $1,000 in duties that previously generated GH¢16,000 for government now yields only GH¢10,000.
It's the same dollar amount, but significantly less in cedi terms for the national budget.
However, we shouldn't lose sight of the bigger picture. Cedi appreciation is fundamentally excellent news for Ghana.
It means cheaper imports—from fuel and food to machinery and medical equipment.
This reduces inflation pressure, improves our purchasing power, makes foreign debt servicing cheaper and ultimately raises living standards for ordinary Ghanaians.
Importantly, while GRA collects less in cedi terms, the government also spends significantly less on foreign currency-denominated expenditures.
Ghana's external debt servicing, which consumes a substantial portion of our budget, becomes cheaper with a stronger cedi.
Government imports—from medical supplies to infrastructure equipment—cost less in cedi terms.
This expenditure reduction may well offset much of the revenue decline, improving the government's overall fiscal position.
The GRA's revenue challenge is a short-term adjustment period.
As the Commissioner-General correctly noted, lower import costs will stimulate increased trading activity. More businesses will import goods, offsetting the per-transaction revenue loss with higher transaction volumes.
Additionally, reduced business costs should boost corporate profits, leading to higher corporate income tax collections.
This situation demonstrates why we need diversified revenue sources less dependent on exchange rate fluctuations.
The government's push for improved domestic tax collection and bringing more businesses into the tax net becomes even more crucial.
Let's celebrate our currency's strength and ensure that it is sustained for a very long period, be it organic or inorganic (artificial), while supporting efforts to build a more resilient revenue system. A stronger cedi benefits every Ghanaian—the government's revenue streams will adapt accordingly.
Joshua Adoboe, MSc.
ESHRE-Certified Clinical Embryologist,
Lister Hospital and Fertility Centre,
Airport Hills – Accra.
