Finance Minister Dr Cassiel Ato Forson has disclosed that compensation for public sector workers remains the largest component of government expenditure, placing significant pressure on other areas of spending.
He made this known during a dialogue with Organised Labour at the Jubilee House in Accra on Tuesday, March 17, as part of ongoing engagements between government and labour representatives.
“Compensation of Ghana’s employees is currently the largest share of government expenditure. Of the total government expenditure, employee compensation accounts for 39%, debt service accounts for 32%, and grants to other government units account for 29%,” he stated.
Dr. Forson explained that the high wage bill has created a crowding-out effect on other critical expenditures.
“The crowding effect of compensation means that while we spend 33% of our compensation budget, our expenditure on compensation, only three per cent is used for goods and services, and capital expenditure represents only six per cent of Ghana’s expenditure.
“Social benefits only represent one per cent of government expenditure, and grants to other government units representing the statutory funds are about 24% while debt service represents 26% of our total expenditure,” he said.
He further outlined key indicators showing the weight of compensation in the country’s fiscal framework.
“Some key facts on the compensation issues are that at the end of the 2025 fiscal year, compensation budget accounted for 44% of non-oil tax revenue, 5.6% of GDP, and 33.78% of total expenditure,” he added.
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