Source: Mugabe averse to austerity | The Financial Gazette August 3, 2017
JUST over a week after Finance Minister Patrick Chinamasa talked up government’s commitment to austerity, President Robert Mugabe, did not only sing from a different page, but also shredded Treasury’s hymn book.
Zimbabwe, which emerged from a decade-long recession in 2009, registered double-digit growth between 2010-2012 and began a reform process in consultation with the International Monetary Fund (IMF) in 2013 to restructure its public finances and debt in a bid to access fresh loans from multilateral lenders.
One of the key reforms was to reduce government spending, particularly on the wage bill, which eats up 91 percent of total revenues.
On at least two occasions, Mugabe has reversed Chinamasa’s plans to cut civil service jobs, allowances and bonus entitlements.
Treasury has, however, pressed on with job cuts and freezes, which have shaved off $10 million from the monthly wage bill, from around $262 million in 2015 to $252 million last year. The overall picture, however remains precarious, with government running up a $1,4 billion budget deficit in 2016.
Analysts have also expressed skepticism about the Mugabe government’s commitment to spending cuts, especially heading into election year in 2018.
Mugabe seems intent on proving the skeptics right.
At a ZANU-PF rally in Chinhoyi last weekend, he ordered the reinstatement of about 2 000 youth officers laid off from the Ministry of Youth, Indigenisation and Economic Empowerment.
“The economy is recovering. Is that the time we should be expelling or youth? Our minerals are yielding more and more revenue for us. More gold, more chrome, more platinum. Please reinstate those youths,” Mugabe said.
“We never, never agreed on the issue of expelling so many youths, 2 000 of them. So, whether it is the Ministry of Finance, or the Ministry of Labour, please stop it.”
Mugabe’s constant reference to a recovering economy do not exactly hold up to scrutiny. The economy grew by an anaemic 0,7 percent in 2016 and is officially projected to expand by 3,7 percent in 2017, but largely because of an exceptional rain season.
Treasury data presented by Chinamasa on July 20 showed minerals’ contribution to government revenue had declined from seven percent in 2012 to 2,2 percent last year, on the back of weak commodity prices.
In short, Mugabe has no economic argument for keeping a huge civil service. But his calculations are obvious, and political.
Having delivered a soporific 90-minute speech that dwelt, at some length, on the 1976 Geneva talks between liberation movements in the then Rhodesia, Ian Smith’s government and the British, Mugabe hardly mentioned the economy.
But, right at the end, he contrived to throw the hordes of unemployed youths in attendance a bone: Government can give you jobs.
Not for the first time, Mugabe confessed to be in the dark about the job cuts in the youth ministry.
This is despite the fact that his Civil Service Commission had ordered the cuts almost a year to the date that Mugabe ordered a reversal.
The CSC’s directive was made in a July 26, 2016 letter, instructing the youth ministry to reduce its workforce from 6 271 posts to 2 585 posts.
However, the ministry partially implemented the directive and of the 3 686 abolished posts, 3 549 posts were still on the ministry’s payroll as at March 31, 2017.
Concerned about an increasing wage bill against declining revenue that is worsening the country’s fiscal position, the IMF has been haplessly imploring the ZANU-PF government to reduce its wage bill and freeze the recruitment of new staff.