Erstwhile Chief Executive Officer of the National Pensions Regulatory Authority (NPRA), Dr Daniel Seddoh, has asserted that government is likely to see a decline as it witness a decline in its revenues post the debt exchange programme.
Speaking on the PM Express Business Edition monitored by norvanreports on Thursday, Dr Seddoh remarked that, the DDEP will affect the profitability of businesses, particularly those in the financial sector, thereby limiting taxes chargeable on their incomes and ultimately affecting tax revenues generated by the State.
“The DDEP will reduce the ability of businesses to be profitable and that affects tax mobilisation by government going forward, the banks in particular.
“We seriously need a rethink of what we are doing, the DDEP will impact government revenue and there is the need for government to engage the businesses that generate tax revenue for the State.
“Let’s us not destroy businesses with programmes such as these but set up businesses that can be run profitably, because if not, who will be working for you to generate taxes,” he remarked.
Dr Seddoh’s assertion of businesses losing profits, is evidenced by the dip in profitability of banks as a result of the mark-to-market losses on their investments in government securities, higher impairments on loans, and rising operating costs.
According to the Central Bank in its Monetary Poicy Committee press statement issued Monday, January 30, 2023, profit-after-tax of banks was GH¢3.9 billion at end December 2022, representing 18.9 percent contraction year-on-year when compared to 12.3 percent annual growth recorded in 2021.
Net interest income however, grew by 23.0 percent to GH¢15.8 billion, higher than the growth of 14.5 percent in 2021. Net fees and commissions also went up by 27.4 percent to GH¢3.7 billion, from the growth of 24.8 percent recorded in 2021.
Accordingly, operating income increased by 30.9 percent, compared with 14.6 percent recorded a year earlier. The strong outturn in operating income was however moderated by increased operating expenses and provisioning during the year.
Operating expenses rose by 32.2 percent in December 2022, compared with 14.2 percent growth in 2021. Provisions also increased sharply by 184.0 percent in December 2022 relative to a contraction of 4.7 percent a year earlier, due to the strong uptick in credit growth, elevated credit risks, and impairments on investments.
As a result, profit before tax declined by 13.5 percent to GH¢6.4 billion in December 2022, compared with an
annual growth of 22.1 percent a year earlier.
Source: norvanreports.com