Professor H. Kwasi Prempeh, Executive Director of the Ghana Centre for Democratic Development (CDD-Ghana), has urged the elimination of the “retirement on salary” compensation practice in the public sector, describing it as unique to Ghana and fiscally unsustainable. In a Facebook post reacting to Finance Minister Dr. Cassiel Ato Forson’s disclosure that 44 percent of Ghana’s 2025 tax revenue was spent on public sector wages—well above the ECOWAS-recommended ceiling of 35 percent—Professor Prempeh argued that such practices exacerbate the country’s severe fiscal constraints.
The Finance Minister made the revelation during a high-level meeting between President John Mahama and organised labour, where he highlighted the growing strain of the wage bill on government finances. He revealed that out of the total tax revenue of GH¢183 billion in 2025, statutory obligations, including transfers to DACF, GETFund, NHIL, and debt servicing, consumed GH¢122.1 billion, leaving only GH¢61.9 billion available.
However, the government’s wage bill alone amounted to GH¢78.9 billion, creating a financing gap that forced the state to borrow approximately GH¢17 billion just to meet salary obligations. Dr. Forson emphasised that the combined burden of wages, debt servicing, and statutory transfers exceeded total tax revenue, effectively crowding out other critical expenditures.
He warned that under the current fiscal conditions, the government lacks the financial space to adequately invest in essential infrastructure such as schools, hospitals, and roads
The Finance Minister noted that while fair remuneration remains a constitutional obligation, the current trajectory of public sector compensation poses a significant structural risk to fiscal sustainability and service delivery. He stressed the need for careful management of wage growth alongside broader fiscal reforms to restore balance and create room for development spending.
Source: Laud Nartey
