header('Content-type: text/html; charset=ISO-8859-1'); Fiscal deficit to widen further.. as gov’t plans to pay COLA to teachers  - News Guide Africa
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Fiscal deficit to widen further.. as gov’t plans to pay COLA to teachers 

Adnan Adams Mohammed

The government through the Fair Wages and Salaries Commission has planned to meet all stakeholders entitled to the 20 percent Cost of Living Allowance (COLA) demanded by teachers to determine the payment terms.

Teacher unions including NAGRAT, GNAT, and others have given a June 30th deadline for the government to pay the allowance or face a series of industrial actions.

According to NAGRAT, the current economic hardship has made teachers worse off, hence the demand for allowances to be paid. But the Fair Wages and Salaries Commission maintains that all relevant stakeholders must come on board for a final determination of the payment. If the government pays the 20% demanded by the teachers, it is likely to widen the fiscal deficit further and also miss the fiscal deficit target of 7.4 percent of Gross Domestic Product, (GDP) end year. But the government has banked it hopes on the collection of the Electronic Transaction Levy (E-Levy) which is estimated to rake in close to GHC5billion at the end of 2022.

“It’s fair that stakeholders are able to propose the payment of COLA or any other allowance, but at the end of the day, we have to get to the table with organized labor, government and all other parties to determine whether COLA will be paid”, said Earl Ankrah, Head of Public Affairs at the Commission. “We are also yet to negotiate the base pay for 2023 so that it is factored into the budget. That is yet to be done to determine the minimum daily wage.”

Already, Fitch Solutions is forecasting the country’s fiscal deficit to GDP ratio in 2022 at 9.8%. This is in line with the International Monetary Fund (IMF) forecast of 9.8% for this year, but far wider than the government’s target of 7.4% of GDP.

“Looking into Ghana’s fiscal position following increased spending on health and household support due to COVID-19 pandemic, Ghana’s fiscal deficit widen to an estimated to 11.3% in 2021. This is well above historical level” said the Risk Analyst at Fitch Solutions, Ben Weaver.

The International Monetary Fund in its April 2022 Fiscal Monitor Report, projected Ghana’s tax revenue to GDP ratio to increase in 2022 to 16.5%, from 14.7% in 2021. This will be a vast improvement compared to the rates registered during the last 10 years.  

In 2023 and 2024, the country’s tax-to-GDP ratio will however fall to 16% and 16.2% respectively, it added.

The Fund also said government expenditure will decline to 25.2% of GDP in 2022, from 26.3% recorded in 2021. This is expected to put the fiscal deficit to GDP ratio at 9.8%.

However, in 2023 and 2024, the Fund is forecasting expenditure-to-GDP ratios of 25.2% and 23.9% respectively.

Meanwhile, Vice President of NAGRAT, Jacob Annaba, explains that the ultimatum comes on the back of current economic conditions and the worsening plight of teachers, as well as the government’s failure to negotiate.

“The President had earlier said, and I quote, “we (government) know how to bring the economy back to life. What we do not know is how to bring people back to life”. The question is what has changed? Mr. President, your people (workers) are dying; please attend to them now and do not prioritize the economy over the human resources. The worker can no longer bear the economic hardship.”

The leadership of NAGRAT noted they would be pushed to embark on an industrial action if their demands are not met.

“We, therefore, demand that, as a matter of urgency, the Government must grant workers a Cost Of Living Allowance (COLA) of 20% at the end of June 2022. Leadership would be left with no option than to declare a strike by the end of July 2022, if all the requests made are not adhered to. Leadership hereby yields to the demand of members for positive action, beginning with the wearing of red bands by the end of June 2022, if the demands made are not met”, he added.

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