Cut wage bill, Zim told

via Cut wage bill, Zim told – DailyNews Live 7 October 2015 by Ndakaziva Majaka

HARARE – The World Bank (WB) says Zimbabwe must quickly reduce its “huge wage bill” as it is affecting infrastructure development in the country.

In a conference call with Sub-Saharan Africa, WB acting chief economist Punam Chuhan-Pole on Monday said while Zimbabwe’s astronomical wage bill was not peculiar to the country alone, government still needed to come up with and implement a “viable solution”.

“Zimbabwe’s wage bill is too huge, of course it is not the only country facing this problem in the region but it is leading to widening deficits and affecting infrastructure projects,” Chuhan-Pole said.

This comes as the country’s 550 000-strong civil service chews up to 83 percent of the government’s revenue. Zimbabwe has an annual budget of $4,1 billion.

Chuhan-Pole said presently, the country did not have fiscal space for developmental ventures which was not optimum for a developing nation.

“This has also led to increasing the cost of borrowing leading to crowding of the private sector. The government in Zimbabwe needs to be certain as to what they are borrowing especially if it is from foreign markets and if the borrowing is mainly consumptive it has to be managed or cut out,” she said.

The Bretton Woods institution’s economist noted government had to focus on reforms like domestic sourcing so that the country’s international debt would be manageable.

Early this year, Finance minister Patrick Chinamasa committed to develop measures aimed at rationalising the country’s civil service wage bill with the Public Service Commission having completed the physical head count for all civil servants as part of the government staff audit.

He, however, later relented and said government was now looking at other options apart from culling its work force.

As part of its Staff Monitored Programme, the International Monetary Fund has said government needs to cut its work force to create fiscal space.

Meanwhile, the WB also cut its economic growth estimate for sub-Saharan Africa to the lowest since 2009 as falling commodity prices and tighter global financial conditions stem activity.

The Washington-based lender lowered its growth forecast for this year to 3,7 percent, 50 basis points down from its projection in June, and compared with 4,6 percent expansion recorded in 2014.

“The dramatic, on-going drop in commodity prices has put pressure on rising fiscal deficits, adding to the challenge in countries with depleted policy buffers,” the WB said in its bi-annual Africa’s Pulse report.

Oil, minerals, metals and agricultural commodities account for nearly three-quarters of the region’s exports. Prices of natural gas, iron ore and coffee had fallen by more than 25 percent since June 2014, it said.