IEA Criticises Levy Cut, Warns of Policy Inconsistency in Ghana’s Extractive Sector

The Institute of Economic Affairs (IEA) has raised concerns over the government’s decision to reduce the Growth and Sustainability Levy from three per cent to one per cent, arguing that the move weakens efforts to maximise value from Ghana’s natural resources.

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At a press briefing in Accra, the think tank said the reduction introduced to ease pressure on investors contradicts a global trend where countries are increasingly asserting control over their natural resources to secure greater economic returns.

The levy had earlier been increased from one per cent to three per cent to boost revenue from the extractive sector, particularly at a time of rising global commodity prices. However, the IEA believes reversing that policy undermines its original objective.

Distinguished Fellow of the institute, Sophia Akuffo, questioned the coherence of the government’s approach, arguing that increasing royalties while simultaneously granting tax relief sends mixed signals about Ghana’s fiscal direction.

She warned that such inconsistencies could limit the country’s ability to fully benefit from its mineral wealth and stressed the need for stable, long-term policies that prioritise national development.

Justice Akuffo also expressed concern over Ghana’s continued reliance on the International Monetary Fund despite its abundant natural resources, noting that this reflects deeper structural issues in resource management.

She further criticised plans by the Ministry of Finance to borrow GH¢17 billion to cover public sector wages, urging the government to instead harness revenue from the extractive industry to support economic growth.

Drawing comparisons with countries such as Botswana, Chile and Burkina Faso, she pointed out that stronger resource ownership models have proven effective in retaining value and driving development.

According to her, Ghana now has a strategic opportunity to reform its resource governance framework, especially with several mining leases nearing expiration. The IEA proposes a model that maintains national control while engaging private sector expertise through service agreements a system it says would maximise long-term benefits.

The institute ultimately called on government to adopt consistent and balanced fiscal policies that protect investor confidence while ensuring that the country’s natural resource wealth translates into sustainable economic transformation.

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