It argued that the current high subsidies on fuel are unsustainable and risky to the economy, warning that the pressure related to fuel subsidies, utilities and wage/salary settlements could offset the gains made in macroeconomic stability.
The acting Governor of the BoG, Dr Henry Kofi Wampah, made this submission at a news conference in Accra yesterday, issuing the bank’s bleakest warning yet after gauging the economy’s health in the last quarter.
Last year, the government spent close to GHc1.2 billion on fuel subsidies, and that amount is expected to climb to GHc2.4 billion this year if the subsidies are not removed.
That, coupled with a high wage bill that cost GHc7.5 billion instead of the target amount of GHc5.6 billion, presents a major challenge to the economy.
The migration of 470,000 public sector workers onto the Single Spine Salary Structure (SSSS) has been fraught with discrepancies, leading to long strikes, most recently by health professionals.
According to Dr Wampah, “the magnitude of fuel subsidies and the negotiated wage increment in 2013 could, therefore, pose a risk to the consolidation process.”
In December 2011, the government cut subsidies on fuel, but under pressure from unions threatening to go on strike, it proposed a reduction in the price hikes.