Government Informs IMF of 10% Cap on Public Sector Wage Hikes for 2025

The Government of Ghana has officially communicated to the International Monetary Fund (IMF) its decision to limit public sector salary increases to a maximum of 10% in 2025, as part of ongoing efforts to manage public spending under the country’s economic reform programme.

This commitment is outlined in the IMF’s latest review of Ghana’s 36-month Extended Credit Facility arrangement, which is set to run until 2026.

“On the expenditure side, the 2025 Budget includes measures to control primary spending, including a 10 percent ceiling on public sector wage increases,” Ghanaian authorities noted in the report.

The announcement precedes the presentation of the 2025 Mid-Year Budget Review by Finance Minister Dr. Cassiel Ato Forson, scheduled for Thursday, July 24, 2025.

According to Finance Ministry projections, Ghana’s public sector wage bill is expected to exceed $7 billion this year—over 30% of anticipated revenue and grants. The government says the cap is aimed at curbing fiscal overruns and addressing inefficiencies in wage administration.

In addition to the wage cap, the government intends to reduce spending on goods and services, streamline the operations of statutory funds, and eliminate low-impact programmes. Foreign-financed capital projects will be implemented cautiously to avoid excessive debt accumulation.

“Expenditures on goods and services will be restrained, non-essential programmes cut, and foreign-funded investments paced carefully,” the government told the IMF. It also pledged to expand social benefits within limited fiscal space.

To offset a decline in development assistance—particularly from USAID—the government has allocated a modest sum (estimated at less than 0.1% of GDP) to bolster key health and agriculture programmes.

Meanwhile, a comprehensive audit of domestic arrears is underway. Initial findings suggest a substantial portion of the outstanding obligations may lack proper documentation, which could lead to a downward revision of reported figures.

The government also reiterated its intention to finalize reforms to the Single Spine Pay Policy. The Finance Minister emphasized that linking pay to productivity is crucial to preventing frequent labour unrest and unplanned salary adjustments.

He pointed out that some public institutions have used protests to demand improved service conditions—effectively increasing their salaries through informal channels.

As government implements these cost-containment measures to stay on track with IMF programme benchmarks, labour unions such as the Ghana Registered Nurses and Midwives Association are watching closely for specific commitments in the upcoming budget review.