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Ghana Gives Massive Public Sector Pay Hike

FILE - People sit in front of closed shops in the central business area of Accra, after shop owners in Ghana's capital closed their shops in protest of high costs, on Oct. 20, 2022.

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.

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 board, effective from Jan. 1, 2023.

Ghana's government increased a cost of living allowance for public workers by 15% in July, citing the impact of "global challenges" on citizens.

The West African gold, oil and cocoa producer is battling its worst economic crisis in a generation.

The local cedi dropped heavily against the 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% last month.

Ghana secured a staff-level agreement with the IMF for a $3 billion, three-year support package in December, but needs to restructure its debt to access the funds.

The government launched a domestic debt exchange program 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'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.