* Mining firms put govt under pressure over tax-President
* Tax was part of measures to help reduce budget deficit
* Chamber of Mines sees room for tax once profits return
(Writes through with details, background)
By Kwasi Kpodo
ACCRA, Jan 24 Ghana has put on hold plans to
introduce a windfall tax on mining profits, Finance Minister
Seth Terkper told Reuters, a move that will delight struggling
gold firms but could undermine efforts to reduce the country's
Ghana is Africa's second-biggest gold producer and the
precious metal is a large source of revenues for the country
whose government is seeking to maintain rapid economic growth
while reining in the deficit and inflation.
But the decision comes after President John Mahama said this
week his country had come under pressure from the industry over
the planned tax, with companies warning it would lead to job
cuts due to a steep fall in gold prices.
"It's on hold in parliament and we are consulting," Terkper
told Reuters late on Thursday.
Terkper had told parliament during the annual budget in
November that the government would impose the tax, which it has
been trying to push through since 2012. No timeframe was given
at the time.
Ghana is viewed as one of Africa's most dynamic countries
because its stable democracy is coupled with robust economic
growth led by exports of gold, oil and cocoa.
However, the planned tax highlights tensions between an
industry feeling the pinch from a 28 percent fall in gold prices
last year and a government facing pressure over a range of
These include inflation, which hit a fresh three-year high
of 13.5 percent in December, and a budget deficit provisionally
expected to land at 10.2 percent for 2013 as well as a weakening
Analysts said pressure intensified this week because of an
announcement that GDP growth in the third quarter of 2013 slowed
sharply to 0.3 percent.
The slowdown is partly due to the mining slump and a
reduction in oil output but it could also be because consumers
are being squeezed by government efforts to rein in the deficit
through measures such as cuts to utility and fuel subsidies.
"They (mining firms) won't allow us to implement the
windfall tax in our country," President John Mahama said at the
World Economic Forum in Davos on Wednesday.
"They threatened to lay off workers if we implement the
windfall tax and because you needed jobs and you don't want
workers laid off then you are coerced to go along," he said.
The gold price fall has affected miners across West Africa
and already led to job losses.
It has deepened problems at AngloGold Ashanti's
Obuasi mine, which is a flagship for a country once called the
Gold Coast. The company plans to lay off 400 workers and
mechanise operations to make the mine profitable again.
The Ghana Chamber of Mines led talks with the government on
behalf of companies that include AngloGold Ashanti, Newmont
and Goldfields, industry executives said.
Toni Aubynn, chief executive of the Chamber, said the
government's decision to delay implementation was prudent given
"Our argument has been the timing and we believe the
government has taken the right decision to prevent further
losses of jobs," Aubynn told Reuters, adding that the tax could
be reintroduced later if the situation improved.
"I don't think that is the final death of windfall profit
tax. If companies are making windfall profit it's only fair that
they share that with stakeholders," Aubynn added.
(Writing by Matthew Mpoke Bigg; Editing by David Lewis and Mark