Public coffers spending


Barely one year after President Robert Mugabe promised to increase the wages of public service workers,  the government has ordered severe austerity measures including retrenchments and slicing of public emoluments from 80 to 40 percent of government revenue.

Finance Minister Patrick Chinamasa has declared that 83 percent of government’s $2 billion costs were going to the salaries of its 554,000 employees, hence the plan  to cut the public sector wage bill to 40 percent of total revenue.

The initiative is intended to reduce the government’s bloated civil service, in the face of reduced economic growth forecast at 1,5 percent from the initial 3,2 percent. The programme is among the measures prescribed by the International Monetary Fund Staff Monitored Program (SMP), as a prerequisite to unblock foreign funding for the country.

In Ghana public utility Doctors have gone on strike demanding better wages and conditions of service, but Government is hesitating because of major budget slippages which have destabilized the economy. There is a fear that any precedent to grant doctors better conditions of service may open floodgates of demands from other public service workers.

But Ghana’s Medical Association is adamant that unless the government acquiesces doctors working at public hospitals across the country will remain on strike, leaving thousands stranded. Patients in the capital, Accra, lined up on Friday at medical facilities, hoping the strike wouldn’t affect their care.

Patients have complained that although doctors may have a grievance, sick Ghanaians should not be made to suffer by being held as hostages.

There is so far no end in sight to the doctors’ strike because the National Labour Commission, which arbitrates such issues, says the strike is illegal and therefore wildcat; meaning that it cannot intervene however legitimate the demands.

Ultimately patients will suffer most, while doctors have promised to submit mass resignations to join the private sector or migrate.

The Ghanaian government is intent on narrowing the budget deficit which increased after public service wages increased to almost 70 percent of tax revenue. The country’s Fitch Ratings was downgraded to B, five levels below investment grade, with a negative outlook which was not inspiring to investors..

Such is the dilemma that most developing countries are facing, considering that the civil service is employs the largest number of workers compared to any other sector. Therefore any increase in emoluments translates directly to a demand on the limited Government revenue.

Such was the case in Zimbabwe where Government awarded civil servants a living “wage” which raised the total claim on public coffers from 58 to 80 percent of Government revenue. Breton Woods institutions including the International Monetary Fund and World Bank made it very clear that the increase was unsustainable.

The ruling Zanu PF had taken a very clear political position to improve wages for the public service. A politburo meeting last year in November decided that t civil service salaries would be increased to US$540 for the least paid staffers, up from the current US$297.

It was announced that President Robert Mugabe had been particularly forceful during the meeting about the need to increase civil service salaries in line with the country’s poverty datum line.

This was undoubtedly a good intention, sadly not matched with the reality of Zimbabwe’s floundering economy.

Equally Ghana is at the cusps of major economic crisis. Last year the country had to turn to the IMF when the currency suffered one of the worst reversals, dropping by 36 percent.

The currency plunged by 36 percent against the dollar as investors lost faith in the ability of the government to curb spending to reduce the deficit which had been set to exceed 10 percent of gross domestic product.

Ghana, like Zambia, had its debt cleared in 2005 but has progressively increased borrowing to a level where debt servicing is more than the GDP.

Categorized | Editorial

Comments are closed.

Our Sponsor

Jevic Japanese Auto Inspections

Social Widgets powered by