The Managing Director of the International Monetary Fund (IMF), Madam Christine Madeiline Odette Lagarde, has asked Sub-Saharan African countries to enhance their domestic tax mobilisation to sustain their economies and help them to remain sovereign.
Addressing key stakeholders at the Future of Work in Sub-Saharan Africa Conference in Accra on Monday, Ms Lagarde said African countries would not sustain their economies by borrowing.
She said public funds should be invested well so that it would be sustainable in the long term, noting that, relying on borrowing for investment in the recommended policy areas of education and digital infrastructure, was risky because “you’re at risk from the market and at risk from the desirability of foreign investors to choose Ghana rather than the other one”.
“Therefore, there must be the right mix between domestic revenue mobilisation and borrowing, so tax is expected, “Ms Lagarde stated.
The IMF Boss pointed out that implementing tax regime was not popular but it was the sensible thing to do to boost economic growth.
“I’m not here advocating for tax but am advocating for sustainable financing structure that will help digital infrastructure so that countries can sustain their growth potential and remain sovereign, “she said.
Ms Lagarde said developing digital fiscal infrastructure was crucial in shoring up the revenue mobilisation efforts of countries, noting that, IMF research had shown that most countries increased their gross domestic products between three and five per cent by leveraging on technology.
Therefore, she said, it would require sustained investment and right policy mix to utilise technology to mobilise revenues, saying that, “so grab the benefit of digitisation to propel growth”
She underscored the need for African leaders to take proactive mitigation measures to advance their economies such as increasing their export base, enhancing investment in infrastructure development and leverage on technology to accelerate economic growth.
She advocated the need for African countries to engage in intra-African trade in order to cushion themselves, and thus, commended African leaders for signing the Continental Free Trade Area Agreement as the right step in boosting trade.
The IMF Boss also urged African countries to take proactive measures to mitigate the negative effects of climate change, noting that, about 1.5 per cent of the gross domestic product of sub-Sahara Africa would fall if nothing was done about it.