By Cooper Inveen

ACCRA, Reuters -Ghana’s parliament has approved a 1.5% additional tax on electronic payment transactions (known as the “elevy”) on Tuesday. This was after the opposition walked away in protest.

The e-levy was proposed by Finance Minister Ken Ofori – Atta in November. It is meant to broaden the tax net. This has been presented as the panacea for Ghana’s financial woes. It was met with fierce opposition that the e-levy sparked a brawl within parliament one month later.

Critics say the elevy will make it more expensive for lower-income individuals and business owners to access the digital economy. But Ofori-Atta says that it’s a way to help Ghanaians contribute their fair share towards the development process.

On Tuesday, the bill was reintroduced by the governing members of parliament. This surprised analysts who had predicted that this would be the only way for the tax’s passage.

Although it was anticipated that it would be resubmitted next week by parliament speaker Alban Bagbin, he said it needed to be handled as an urgent matter and should be fast-tracked.

This tax should not apply to the financial institutions of Ghana. “It would be disincentive for the private sector in Ghana,” Haruna Idrisu (minority leader) stated in a parliament statement.

Following his speech, the opposition parties left, refusing entry to vote.

Government estimates suggest that the tax could generate up to 6.9 Billion Ghanaian cedi (roughly $926 Million) by 2022.

Analysts claim that the passing of the electronic levy would reassure both lenders and investors of Ghana regarding their ability to generate revenues through tough decisions, which could help reduce the spread of government bonds.

After the tax’s passage, markets immediately reacted. The prices of Ghanaian Eurobonds rose as high as 2.77 Cents per dollar and reached their highest level since before Russia invaded Ukraine.

Analysts believe that Ghana may need to take additional fiscal steps in order to correct its economic woes.

Ghana is one of the largest West African economies. It faces rampant inflation and an increasing debt load. Concerns about government’s ability pass revenue-raising legislation have led to the downgrading of Ghana’s credit rating.

Amaka Anku (consultancy Eurasia Group Africa’s practice head) stated that “regaining market access” will likely require strong fiscal data in the coming months. The e-levy is a tool that will assist, but it does not make a difference.

The highest consumer inflation rate since 2016 was 15.7% in February. In February, consumer inflation reached 15.7% year-on-year, which is the second highest level since 2016.

Last week, the government announced drastic spending reductions to reduce the deficit. It blamed its economic difficulties on the COVID-19 pandemic as well as the conflict in Ukraine.