G40 blocks Chinamasa on austerity measures

Source: G40 blocks Chinamasa on austerity measures – The Zimbabwe Independent September 16, 2016

THE Zanu PF faction linked to First Lady Grace Mugabe, G40, on Monday stopped Finance minister Patrick Chinamasa in his tracks and threw out his cocktail of austerity measures which included civil service retrenchments, salary cuts, scrapping of bonuses and closure of embassies.

By Elias Mambo

This happened in cabinet on Monday where G40 political gladiators dramatically blocked Chinamasa’s proposals presented in parliament, raising serious concerns that government has become dysfunctional. Chinamasa had last week warned that the budget deficit had already overshot the projected US$150 million in the first half of the year at US$623 million, and that the shortfall for the year could rise above US$1 billion. As a result government needed to act on public expenditures urgently.

Chinamasa said government would also rationalise the number of embassies and consulates as part of cost-cutting measures.

Zimbabwe has 45 foreign missions and consulates, some of which are in countries that rarely do business with the country.

However, Foreign Affairs permanent secretary Joey Bimha this week said his ministry had not yet received information planned embassy closures.

Bimha said: “As a ministry we have not been informed of that decision, thus we will not take any action. We actually read about it in the newspapers that there is such a proposal to trim embassies. The embassies are a prerogative of the head of state and government and we have not been given that instruction.”
Asked what he thought about the proposals, Bimha — a G40 ally — said he could not comment on something which did not exist.

Ministers linked to Vice-President Emmerson Mnangagwa’s faction, which is engaged in a cut-throat succession battle with G40, said Chinamasa is making a logical economic argument aimed at preventing bankruptcy and a total collapse of the government.

They said the government could not sustain its operations without introducing austerity measures, considering that 96,8% of revenues is going towards wages and recurrent expenditure. Government has been struggling to pay workers for some time, resulting in pay dates being constantly shifted.

The G40 faction, however, is more concerned about the political ramifications of austerity measures ahead of the 2018 general elections and believes Chinamasa is bent on fuelling chaos and riots through his “unapproved” and “arbitrary” interventions.

The ministers said Chinamasa’s proposal to retrench 25 000 civil servants, slash salaries of cabinet ministers and other employees was also meant to please international financial institutions such as the World Bank, the International Monetary Fund (IMF) and African Development Bank (AfDB) as well as Western countries such as Britain, which want payment of US$1,8 billion arrears and reforms so that Zimbabwe can secure US$2 billion in fresh funding.

A minister associated with G40 said Chinamasa’s austerity measures are “a sinister package of snake oil proposals meant to incite people to rise against the government”.

The G40 camp claimed Chinamasa and other members of the Mnangagwa faction are sympathetic to the demonstrations that have been rocking Zimbabwe since July 1 as they are desperate to push President Robert Mugabe out of power before the 2018 elections.

“Before coming up with such recommendations, Chinamasa should have come up with better options which include early retirements rather than retrenching,” one minister said. “He should have explored ways of ensuring there is a soft landing for those retrenched rather than throwing them onto the streets to join protestors. This is an attempt to fuel anti-government riots.”

However, a minister in the Mnangagwa faction said: “This is about reform and economic pragmatism, not populist electioneering. We need fiscal discipline, sustainability and hence public expenditure rationalisation.”

During his mid-term fiscal policy review statement presentation, Chinamasa said the austerity measures had been approved by cabinet, but the G40 ministers insisted the reforms were not authorised.

This is not the first time Chinamasa’s policy measures have been reversed. Last year, after he announced the suspension of civil servants’ bonuses, he was publicly humiliated by Mugabe who said the government had an obligation to pay its workers a thirteenth cheque.

The latest move by government to shoot down proposed austerity measures means that the Lima Plan, which seeks to settle US$1,8 billion arrears owed to preferred international financial institutions — the World Bank, IMF and AfDB — before unlocking US$2 billion in fresh funding, is all but dead in the water.