Civil servants’ bonuses worsen cash shortages

Source: Civil servants’ bonuses worsen cash shortages – NewsDay Zimbabwe July 6, 2017

Government’s decision to award civil servants bonuses without a subsequent increase in money supply on the market has worsened the country’s cash crisis, with banks struggling to dispense cash to depositors.

By Tatenda Chitagu

Public Service minister Prisca Mupfumira admitted that the government was struggling to pay bonuses to its workforce due to the liquidity crunch.

“Salaries and bonuses are being paid as undertaken by the President albeit in a staggered manner due to the economic turbulence,” she said on Monday in Masvingo at commemorations to mark Africa Public Service Day. “We are experiencing a liquidity crunch.”

From last week, most banks in Masvingo and other cities and towns had reduced the daily withdrawal limits to $30 and were limiting the number of people receiving cash.

Most banks were only serving up to 200 people per day, translating to only $5 000 dispensed daily.

Africa Export and Import Bank (Afreximbank), which guaranteed the printing of bond notes through a $200 million export incentive facility, revealed that the government was negotiating for another loan to print more bond notes.

Speaking at the bank’s 24th annual general meeting in Kigali, Rwanda, last week, Afreximbank president Benedict Orama said negotiations were underway to review the $200 million facility.

Reserve Bank of Zimbabwe governor John Mangudya also said on the sidelines of the same meeting that the central bank was confident the facility would be extended.

He said an extension of the facility could mean more bond notes on the market.