Salary reforms answer to cash shortages: RBZ

Source: Salary reforms answer to cash shortages: RBZ – Sunday News August 14, 2016

Lungile Tshuma Sunday News Correspondent
THE Government should develop “bold and stern” measures of reducing expenditure with special focus on the salary bill while increasing industrial production as a possible way of dealing with the cash crisis, Reserve Bank of Zimbabwe Governor Dr John Mangudya has said. Long queues at banking institutions which were only prevalent at month ends havebecome common while most financial institutions have continued to review their maximum withdrawal limits to as low as $100 per day. In a wide ranging interview yesterday, Dr Mangudya said the long queues at banks were a symptom of high Government expenditure which needs to be cut and the money invested in production to boost exports. He said it was unsustainable that 85 percent of the revenue that the Government was generating was now catering for civil servants salaries. He said the ideal percent of salaries ratio to revenue should be 40 percent.

“During pay days, there are bound to be long queues. The Government is the largest employer and people will want to be paid in cash. The problem is that our expenditure is too high because there is no Government or a company which can spend the bulk of its revenue on paying salaries. The Government is spending more than 85 percent on civil servants’ salaries and that is disastrous,” said Dr Mangudya.

The Government is already carrying out a staff rationalisation exercise to reduce and realign its work force as a way of dealing with the huge wage bill. He said cash problems were also to do with the mentality of people who want to use cash adding that “people want cash but Government does not receive payments in cash.”

He said: “People should note that when companies pay their tax to Zimra they use RTGS (Real Time Gross Settlement) not cash but civil servants will want their money in cash. Cash comes from exports and that is

the money that will be used to pay civil servants. Civil servants don’t import cash but we only get cash through exports which include exporting tobacco, minerals and other products.”

Dr Mangudya said the Government has the potential to turn around the economy because the country is endowed with many resources that can be harnessed for production.

“We have plenty of gold and diamond which God gave us and those should be harnessed to generate more exports. The introduction of bond notes is meant to incentivise businesses so that they can export and increase foreign currency and that is healthy for our multi-currency system,” he said.

“As a country we need bold and stern sustainable solutions which will be hinged on production, production and production. Production is important in that it increases exports, reduces dependency on revenue imports, increases fiscal space and Government expenditure will also be low.”

Dr Mangudya said the adoption of the multi-currency system was under threat, as it was yet to be widely adopted by people who are addicted to the US dollar and rand only.

“People are addicted to the US dollar and rand. Unfortunately we don’t print that money instead we import it. What we are going through is not complicated because the situation can be reversed. As I said, we should reduce expenditure and increase production. Without production we are not going to solve this problem,” said Dr Mangudya.

He also advised people to embrace plastic money which is the modern and best practice in doing business.

“There is no need for people to be in long queues because they should just use plastic money. Through their cards, they can buy anything they want so that they cannot stand in queues.”

The country has been experiencing cash shortages which has seen queues at the banks resurfacing. The Government accuses some businesses of hoarding the money starving the banking institutions. Because of the strengthening of the dollar against major regional currencies, there has been suspicions that the countries are fishing the dollar from Zimbabwe to boost their foreign currency reserves.

 

COMMENTS

WORDPRESS: 9
  • comment-avatar
    Joe Cool 6 years ago

    How do you reduce a huge wage bill by ‘realigning’ your work force? And didn’t I read an emphatic denial – by the responsible Minister no less- that any civil servants will be retrenched? Lies after lies, and no shame in sight.

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      ntaba 6 years ago

      What about all the money that Gideon Gonzo misappropriated and the destruction of the agricultural sector that Scoones and Mugabe deliberately destroyed?

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    Bwedebwese 6 years ago

    Each of Zimbabwe’s 6000 local authority wards has at least 5 ZANU-PF party functionaries employed by mostly the Ministry of Youth and that of Women’s affairs, ostensibly to ensure that resources released by government to youth and women empowerment are used to the maximum effect. In reality has no resources of its own for youth and women empowerment. Instead, the functionaries, most of whom have five “O” levels, ensure that programmes and projects financed by NGOs are channelled towards party youth and women- which means that they work about 3-days a month for a full salary. If these 30 000 unnecessary workers were retrenched, the salary bill will be reduced significantly. Just saying.

  • comment-avatar
    Bwedebwese 6 years ago

    Each of Zimbabwe’s 6000 local authority wards has at least 5 ZANU-PF party functionaries employed by mostly the Ministry of Youth and that of Women’s affairs, ostensibly to ensure that resources released by government to youth and women empowerment are used to the maximum effect. In reality government has no resources of its own for youth and women empowerment. Instead, the functionaries (most of whom have do not have five “O” levels) ensure that programmes and projects financed by NGOs are channelled towards party youth and women- which means that they work about 3-days a month for a full government salary for party work. If these 30 000 unnecessary workers were retrenched, the salary bill will be reduced significantly. Just saying.

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    Its interesting that “payments made by RTGS are not cash” This is an admission that the entire banking system is underpinned by a fraud of gigantic size and the whole thing is going to crash very soon.

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    mambo 6 years ago

    Firstly we had Jonno the Mouth. Now we have Jonno the Mouse, a wee sleekit timerous beastie, who’s completely lost in the maize field of basic economics and how countries work!

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    The Government is already carrying out a staff rationalisation exercise to reduce and realign its work force as a way of dealing with the huge wage bill…………START with the useless 92 year old lump of meat in HRE ……THEN you could talk of other things…………This article is not short of “PIE IN THE SKY “…..MAYBE the POVO can eat that…..TO solve the food crisis……..

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    Fallenz 6 years ago

    It’s amazingly ridiculous that a country is lead by idgits that haven’t more sense about basic economics (per mambo’s comment) than the least educated bush farmers. The farmers realize that production is necessary. Those farmers understand they can not continue to fund their family without producing something of value, and gaining their necessities by barter or exchange of that production. He can not provide for his family otherwise… at least, not for long. If he sells his assets (oxen, plough, herd, etc.) he has money in his pocket for a time, but he has nothing left with which he can generate production… so instead, he maintains his assets and utilizes them to create sustainable production which he can sell. A country’s economics is exactly that idea scaled up.

    Obviously, wearing fancy suits, having university degrees, and holding a title does not make an idgit smart. Perhaps those idgits-in-charge need to be replaced by bush farmers… or, at least, with people with a farmer’s level of common sense.