Ghana Increases Civil Servant Salaries by 30% as Inflation Bites
Ghana’s government and trade unions on Thursday agreed to increase all public servants’ salaries by 30% for 2023, they said in a joint statement, as the country struggles to reduce debt and tackle rampant inflation.
With about 47 billion in public debt, Ghana has slipped into a strong economic crisis after changing market dynamics blocked the government from accessing the Eurobond market.
Recently, the government secured $3 billion in funding support from the International Monetary Fund to support its economic recovery plan. However, the term of the agreement with the multilateral lender includes the need to restructure its debt stock.
The inflation rate crossed 54% in December 2022 according to data from the statistic office at the time authority is negotiating debt restructuring with investors.
Consequent to macroeconomic pressures, the cedi dropped heavily against the dollar last year as government spending cuts and central bank interest rate hikes failed to tame inflation.
Trade unions representing public service employees started negotiating salary rises with the government in November, a few months after hardship spurred street protests that pushed the government to seek help from the International Monetary Fund (IMF).
The two parties on Thursday settled on a 30% increase to base pay across the board, effective from Jan. 1, 2023. Ghana’s government announced sweeping spending cuts in March, including a lowering of ministers’ salaries, to reduce the deficit, contain inflation and slow the cedi’s slide.
But it also increased a cost of living allowance for public workers by 15% in July, citing the impact of “global challenges” on citizens.
The government launched a domestic debt exchange programme last month and later said it would default on nearly all of its $28.4 billion of external debts. It asked to restructure its bilateral debt under the G20 common framework platform this week. #Ghana Increases Civil Servant Salaries by 30% as Inflation Bites