Chinamasa’s job on the line

via Chinamasa’s job on the line | The Financial Gazette – Zimbabwe News by Clemence Manyukwe 27 Feb 2014

THE kitchen could be getting too hot for Finance Minister Patrick Chinamasa who, despite the declining revenue trickling into government’s coffers, must urgently look for cash to fund civil servants’ salary increases while at the same time keeping the administration’s programmes running or risk falling out with President Robert Mugabe, who is increasingly getting impatient with him, the Financial Gazette can report.

While the former justice minister distinguished himself as an astute mind in the legal field, he has had a torrid time in juggling the government’s books as the gap between its income and expenditure continues to widen. Government is currently failing to take care of its daily needs because of a worsening liquidity crunch spawned by the collapse of industry and commerce against an alarming growth in imports.

While Chinamasa has had to defer capital projects to lessen pressures on the fiscus, he has become the fall guy as colleagues in President Mugabe’s bloated Cabinet attribute their poor performance to under-funding. A few weeks ago, he had to re-adjust the National Budget to clear its passage in Parliament after members of the Parliament Legal Committee (PLC) had threatened to throw spanners into the works.

The PLC had noted that some aspects of the budget were unconstitutional as it had failed to provide independent budgets for constitutional commissions such as the Zimbabwe Human Rights Commission and the Zimbabwe Electoral Commission. To conserve the little resources reaching government purse, Chinamasa had not provided for separate budgets for the commissions, preferring to accommodate them under their parent ministries.

As a result, the PLC had written to him threatening to issue an adverse report on the budget, which could have blocked its passage in the National Assembly, thereby crippling government’s operations. In the end, Chinamasa had to eat a humble pie. Chinamasa’s biggest challenge relates to the funding of civil servants’ salary increases awarded last month.

He has since deferred their payment to April, hoping by then revenue inflows would have improved. Desperate to avoid a reputational risk after pledging to increase public servants salaries ahead of the elections, President Mugabe is exerting pressure on Chinamasa to find innovative ways of funding the wage bill or get out of the kitchen should he find it to be too hot for him.

President Mugabe admitted recently to pressurising the Finance and Economic Development Minister to hike salaries for civil servants even though Treasury had not made such budgetary provision. In the run up to last year’s polls which ZANU-PF won, the incumbent promised civil servants a salary hike by December 2013 pegged against the Poverty Datum Line (PDL), but his pledge has remained unfulfilled due to the precarious nature of the government’s finances.
The cash squeeze has resulted in Treasury dragging its feet on salary hikes, amid growing disillusionment among State employees who have been agitating for better pay since the inclusive government era.

President Mugabe recently gave Chinamasa the option of resigning if he was not up to the task.  The ZANU-PF leader revealed that initially Chinamasa had said it was not possible to raise civil servants salaries, but had offered to replace him if he was not able to come up with the required salary formula. The minister opted to keep his job.

“And so we must have normal salaries. Yes, we cannot have them from day one, but we must have them on paper for a start and work towards their being fulfilled in practice.  And that Chinamasa is doing,” said President Mugabe in an interview with the State broadcaster to mark his 90th birthday. “At first he said we could not do it and I said well if you can’t do it tell me I will get someone to do it.”

“That is why he announced that salaries will be going to be above the poverty datum line.” He said if civil servants were to demonstrate against poor pay, such protests would not be interfered with as their grievances are genuine. Although government reached a salary deal with its workers last month, Treasury has since indicated that the new thresholds could only be effected in April, although backdated to January this year.

In his 2014 National Budget, Chinamasa did not plan for any huge payouts, but pledged to come up with a roadmap that would result in the reduction of the wage Bill.
The minister had argued that the government wage bill was consuming an unsustainable 75 percent of revenue and this needed to be reduced to 30 percent by 2018.
But pressure brought to bear on him by President Mugabe is already putting the budget under stress, amid indications several projects could suffer as resources are diverted towards salaries.

Government has since agreed on a deal that should see the lowest-paid civil servant in Grade B1 getting US$375, up from US$297. The increments, when effected, will see the civil service wage bill for the nearly 230 000 workers increasing by US$13 million to US$155 million per month.
Marginal public sector salary increases in 2011 and 2012, crowded out spending in key areas resulting in fiscal stress, including the accumulation of domestic payments arrears.

With his US$4,2 billion budget for 2014 having no provision for salary increases, it would be an uphill struggle to fund the increments. Analyst reason that Chinamasa is walking a tight-rope and should count himself lucky if he survives the boot. Revenues from diamonds have not been forthcoming to lessen the minister’s troubles and the absence of budgetary support does not make the job any easier.

Civil servants are already canvassing views on the course of action to take should government fail to deliver on its promises.
Unions are not ruling out the possibility of embarking on a crippling strike to get their dues, with the militant Progress Teachers Union of Zimbabwe (PTUZ) spitting fire over the issue.

Vusumuzi Mahlangu, PTUZ’s provincial co-ordinator for Bulawayo, said they doubted government’s ability to make good on its promises in view of the precarious state of its finances. “Where will the government get the money since they are saying they are broke; it’s just a miracle that will not happen. We as the PTUZ have no option but to go on strike – that’s the only option that we have,” said Mahlangu.

Economic commentators are also questioning the sustainability of the salary increases in the long-term. Prosper Chitambara, an economist, said while government could use proceeds from the sale of diamonds at Antwerp in Belgium to quieten the civil servants, it cannot keep on relying on stop-gap measures to placate its restive employees.

“Looking at the (economic) indicators; they are really not good. There is need for structural reforms to sustain this reform or else it will end up being a once off thing,” Chitambara said. Bongani Ngwenya, an economist and Dean of faculty of Business from Solusi University, said there hasn’t been any improvement in the state of the economy to warrant a salary review for the government workers in line with the PDL.