With the data to be released by the INE today, the government could be led to grant a wage increase higher than the 3% proposed in the most recent meeting of the Social Coordination Council last week. The government’s proposal, according to a Finance Ministry source, was based on inflation scenarios provided in April by the INE.

The first of the scenarios indicated that the inflation rate for the year would stand at 1.4% if the Consumer Price Index between April and December showed behavior identical to that seen in 2001, when increases in fuel prices were also experienced.

Two other scenarios predicted inflation rates of below 1%. If the Consumer Price Index were between April and December to show performance equal to the average over the last five years, the inflation rate would be 0.8%, dropping to 0.7% if the Index showed variation equal to that registered during the same period last year.

But the scenario the INE considered most likely was that of an inflation rate of 2.6%, based on the assumption that the Consumer Price Index would behave similarly to 2002, when increases in fuel prices also occurred. Based on this most “pessimistic” scenario, the government moved ahead with a 3% wage increase proposal.

In May, however, INE and International Monetary Fund specialists concluded that the inflation rate for the month of April had been 2.1%, almost double that registered in March (1.5%). Based on this information, forecasts for 2006 were re-calculated to 5.5%.

Based on these new calculations, Bank of Cape Verde governor Carlos Burgo announced that inflation this year could reach 5.6%, while at the same time calling for the containment of salaries.

This new data led union confederation UNTC-CS yesterday to request a new round of negotiations in the Social Coordination Council. Meanwhile, the president of the Leeward Islands Chamber of Commerce, Orlando Mascarenhas, called on the government during an interview with RCV radio to go beyond the 3% it has proposed, a figure included in the State Budget, which will be debated later this month in parliament. A 3% wage increase for public employees would represent an additional 350 million escudos in public spending this year. If the government opts for a 4% increase, this figure will go up by approximately 120 million escudos, which is equivalent, according to Finance Ministry data, to two days’ worth of revenue collections in the State Treasury.

On Thursday, union organization CCSL intends to hold a public manifestation in order to convince the government to reconsider its position regarding the wage increase. The protesters will also demand the resignation of the Minister of Finance and the Minister of Labor and Solidarity for allegedly having deliberately withheld the truth when they presented the Social Coordination Council with a 2.6% inflation forecast.