Source: Govt in wage bill headache – DailyNews Live
Ndakaziva Majaka 3 July 2017
HARARE – Government is still struggling to contain its wage bill as it
emerged that this expenditure accounted for 86 percent of its overheads in
the first month of the year.
President Robert Mugabe’s administration, under pressure to live within
its means, has previously pledged to lower its salary bill to 40 percent
of total expenditure.
But with elections fast approaching next year, it doesn’t appear
government has the political will to slash the wage bill, lest it may
infuriate its workers.
A consolidated statement of financial performance of the Consolidated
Revenue Fund for the month of January, released by the Finance ministry
accountant general Daniel Muchemwa, showed that government is indeed
struggling to contain the wage bill.
Muchemwa said while expenditure for the month under review stood at $308
million against a budget of $362 million – leaving a $54 million variance
– public sector salaries continued to gobble the bulk of the budget.
“Major costs incurred related to employment costs amounted to $238
million, which is 86 percent of total expenditure,” said Muchemwa.
The development piles pressure on Finance minister Patrick Chinamasa who,
in his 2015 mid-term fiscal statement, announced government’s intention to
reduce the wage bill from an average of 80 percent to 40 percent on wages
in the long-term.
An albatross around Chinamasa’s neck, the public sector wage bill is
anticipated to gobble $3 billion this year, leaving only $400 million for
current operations, capital and social projects.
It is being projected that government will run a deficit of $400 million
this year.
Already, the parliamentary portfolio committee on Finance and Economic
Development has recommended that government carry out a restructuring of
the civil service and reduce the wage bill to 70 percent of the budget
within the first quarter of the year.
This comes as the International Monetary Fund (IMF) head of delegation to
Zimbabwe, Ana Lucia Coronel – who was in the country recently to hold
discussions with government, private sector representatives and civil
society for the 2017 Article IV Consultations – also cautioned the country
against splurging on salaries and wages.
“. . . Excessive government spending, if continued, could exacerbate the
cash scarcity, further jeopardise the health of the external and financial
sectors, and, ultimately, fuel inflation.
“Spending pressures stem from high employment costs, government transfers
to support specific economic sectors, and elevated discretionary
expenditure . . . Reinforcing the government’s efforts to curtail
non-priority spending is also pressing,” Coronel said, adding that
reducing the wage bill could involve reviewing allowances and benefits and
evaluating the size of the civil service with a view to eliminating
non-essential posts.
Meanwhile, Muchemwa said government spent $9 million on goods and services
against a budget of $14 million.
“Majority expenses incurred by line ministries were not paid for due to
cash flow constrains faced currently by the government of Zimbabwe.
“Cash generated is inadequate to meet current obligations. Acquisitions of
various capital expenditure (vehicles, furniture and equipment) amounted
to $3 million against budgeted $15 million due to limited available cash
resources,” the accountant general said.
He said in January, government made capital transfers to recently-acquired
pharmaceuticals concern CAPS Holdings, worth $7,5 million, with $46,3
million going to the Grain Marketing Board and the Zimbabwe Revenue
Authority receiving $712 000 from Treasury.
In the month under review, government recorded a $30 million deficit
against a budgeted deficit of $84 million.
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