Inflation is hovering at a record 50.3 percent in Ghana, once described as Africa’s shining star by the World Bank.
Ghana’s government and trade unions have agreed to increase all public servants’ salaries by 30 percent for 2023, they said in a joint statement, as the country struggles to reduce debt and tackle rampant 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 percent increase to base pay across the board, effective from January 1, 2023.
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The West African gold, oil and cocoa producer, once described as Africa’s shining star by the World Bank, is battling its worst economic crisis in a generation, with inflation hovering at a record 50.3 percent, the highest in 21 years.
The local cedi dropped heavily against the US dollar last year as government spending cuts and central bank interest rate hikes failed to tame inflation, which rose to a new high of 54 percent last month.
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 the cost of living allowance for public workers by 15 percent in July, citing the effect of “global challenges” on citizens.
Ghana secured a staff-level agreement with the IMF for a $3bn, three-year support package in December. But it needs to restructure its debt to access the funds.
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The government launched a domestic debt exchange programme last month and later said it would default on nearly all of its $28.4bn of external debts.
It asked to restructure its bilateral debt under the G20 common framework platform this week.