Source: Populism killing Zim recovery prospects – DailyNews Live
4 July 2017
HARARE – It is apparent the President Robert Mugabe administration’s
populist tendencies and reluctance to implement reforms is increasingly
creating headaches for his government.
This is proved by latest revelations by the Finance ministry’s
accountant-general, Daniel Muchemwa, on the state of government’s
finances.
In his consolidated statement of financial performance of the Consolidated
Revenue Fund for January, Muchemwa clearly indicated that government’s
income and expenditure account is in shambles – expenditure far exceeds
income.
Worryingly, the accountant general pointed out that 86 percent of
government’s income in the month under review was gobbled by the bloated
civil service wage bill.
“Major costs incurred related to employment amounted to $238 million,
which is 86 percent of total expenditure,” Muchemwa said.
That is definitely unhealthy.
Month-in, month-out, public service salaries have continued to gobble a
greater chunk of government revenue.
This consumptive expenditure has crowded out capital projects and other
important commitments, particularly developmental.
Finance minister Patrick Chinamasa – under pressure to strike a balance
between the dwindling national revenue and unrestrained government
expenditure – made a commitment in his 2015 mid-term fiscal statement to
reduce the wage bill from the average 80 percent of income to 40 percent
in the long-term. But two years down the line, it remains to be done.
And the public sector wage bill is anticipated to gobble $3 billion this
year, from the country’s $4 billion national budget.
This financial mess stems from government’s reluctance to implement
reforms.
The Mugabe administration has been advised to conduct a civil service
audit to weed out ghost workers and lay off redundant staff, among other
reforms.
Under the International Monetary Fund (IMF) staff-monitored programme,
government was advised to streamline its 300 000-plus workforce to almost
half, a move that would free up revenue and spur economic development.
Parliament’s Finance and Economic Development portfolio committee has also
recommended that government restructures the civil service and reduce the
wage bill to 70 percent of the budget within the first quarter of the
year.
Recently, the IMF head of delegation to Zimbabwe, Ana Lucia Coronel – who
was in the country to hold discussions with government, private sector
representatives and civil society for the 2017 Article IV Consultations –
warned government 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.
Of interest, she noted that apart from laying off redundant staff,
reducing the hefty public service wage bill could involve reviewing
allowances and benefits, with a view to eliminating non-essential posts.
That was certainly true.
Actually, Auditor-General Mildred Chiri’s latest reports exposed gross
misappropriation of funds by State-run institutions, with some
unproductive parastatals’ executives awarding themselves hefty and
undeserved salaries and allowances.
Hard-earned tax payers’ money has gone down the drain as government
refuses to implement reforms, which include privatising the non-performing
and perennial loss-making parastatals, which continue to be a burden on
the fiscus.
A case in point, which clearly indicates how Mugabe’s resistance to
implement reforms has created a financial mess, is how, in a typical
populist approach, he reversed Chinamasa’s move to suspend bonuses, as
government could not afford to pay the 13th cheques.
While 93-year-old Mugabe won the hearts of many but up to today, some
civil servants have not received their 2016 bonuses, seven months into
2017.
It is hard and almost difficult for populism to prevail against
practicality.
It always creates challenges.
COMMENTS