Ghana Backs Down on Proposed Condom Tax

Ghana on Tuesday backed down on a proposed tax on imported condoms after mooting increased levies on foreign-made goods as a way of cutting government debt.

Finance Minister Seth Terkper made the announcement as he presented the 2014 budget, backing parliament's proposal last week to raise overall sales tax by 2.5 percent.

"The preference for VAT (value added tax) is more efficient," he said.

Health campaigners had expressed reservations about the proposal to impose a one-percent tax on the prophylactics, saying it could dissuade people from using them and harm HIV prevention initiatives.

The special tax would also have covered imports such as cutlasses, which are widely used in agriculture in the west African country, and outboard motors.

Ghana has been seeking to cut spending and raise revenue in the wake of a year of grim economic news, including a ratings downgrade due to concerns over the country's ballooning deficit.

Since President John Dramani Mahama's election victory last December, Ghana has been struggling with a depreciating cedi and a rising budget deficit caused by overspending in the run-up to the election.

The country in the past has posted high growth rates based on exports of gold and cocoa as well as oil, which started production in 2010.

Terkper said the government aimed for economic growth of 8.0 percent in 2014, up from the 7.4 percent expected this year.

He also set a deficit target of 8.5 percent of Gross Domestic Product (GDP) for the coming 12 months and expected a deficit of 10.2 percent this year, down from 11.8 percent in 2012.

"Our country has high potential for development, underpinned by a relatively well-diversified economy, multiple growth drivers, a sizeable sub-regional market, hardworking and skilled citizens," he added.

"We will continue to pursue the opportunities for prosperity and wealth with additional bold initiatives."