via No cuts to Zim’s public sector wage bill – DailyNews Live 27 MARCH 2014
Zimbabwe is not prepared to slash its public sector wage bill to meet debt-reduction plans agreed with the IMF because it will involve too many job cuts, the Finance minister said yesterday.
The International Monetary Fund in January approved a six-month extension of a monitoring programme for Zimbabwe aimed at helping it to clear $10bn in external debts and give it access to much-needed new international credit.
Part of the deal included cutting Zimbabwe’s wage bill from 70 percent of the budget but this pledge will not be met, Finance Minister Patrick Chinamasa has told the IMF.
Economists recommend Zimbabwe bring spending on State wages to below 40 percent of its total budget.
“Addressing it overnight would mean very drastic measures which I indicated to them (IMF) I am not prepared to take. That would mean retrenchment of civil servants,” Chinamasa said.
Zimbabwe, which is emerging from a decade of economic decline and hyperinflation, began the IMF-led, staff-monitored programme in June.
Cutting wages would allow Harare to free money to develop its failing infrastructure, including roads and power-generating plants, as well as social services like health and education.
The IMF will re-open an office in Zimbabwe this year, 10 years after it left. It did not immediately respond for comment.
Zimbabwe also agreed to strengthen corporate governance in banks, increase transparency in diamond mining and sales and amend its mining laws to encourage investment.
President Robert Mugabe’s government is still behind the IMF plan but it will wait until its $11bn economy grows and revenues increase before cutting salaries, Chinamasa added.
Chinamasa said last weekend that the government would pay workers their March salaries today, two days after the money was due. He did not give a reason for the delay and he declined on Wednesday to say if the money was available.
Delays in paying salaries raises questions over the state of government finances. Latest data shows the government in January missed its $278m revenue target by $12m.
The staff monitoring programme is a major step for Zimbabwe in normalising ties with the IMF, which in 2003 suspended Harare’s right to vote on IMF resolutions — a step towards expulsion from IMF membership — over policy differences with Mugabe and non-payment of arrears.
Zimbabwe’s economy is struggling due to a lack of investment and closure of companies which complain of high wage and other costs as well as shortages of water and electricity.
Chinamasa had a meeting with China Power Investment Corp yesterday in an effort to persuade the Chinese company to build a 1 200 MW thermal power station at a cost of $2,2bn.
COMMENTS
Chinamasa says that government will cut the civil service once the economy improves, but the economy will not improve until the civil service is trimmed. So Chinamasa is, in essence, saying that he will not do what is necessary to improve the economy.
Chinamasa has no guts
Zim $ is on its way back!
Government service is not for profit but to take care of its citizens . Good stance by Chinamasa of protecting the workers. But Chinamasa need to close all the leaks caused by corruption. His party has promoted corruption depleting state coffers.Must deal with ghost workers