via Chinamasa: Govt wage bill embarrassing 23/09/2014
THE government’s wage bill is embarrassing and unsustainable, Finance Minister Patrick Chinamasa said on Tuesday, echoing criticism from the IMF as the country looks to regain access to international credit lines.
More than three quarters of the country’s revenue goes to paying the salaries of more than 250,000 civil servants, leaving little money to pay down debt and to rebuild crumbling public infrastructure such as roads, schools and hospitals
“I am embarrassed that our wage bill is some 76 percent of whatever revenue we receive. It’s not good, it’s not sustainable,” Chinamasa told business leaders in Harare on Tuesday.
President Robert Mugabe raised salaries for government workers by 14 percent early this year, making good on promises made in the run-up to last year’s election, and moves to roll back the hike would not go down well.
With its finances seriously strained in a failing economy, the government has struggled to pay state workers this year, resulting in frequent changes to pay dates.
Opposition parties have warned the Zanu PF administration that it was risking a coup by unimpressed security services personnel.
“As to the solution… we have to create the necessary political climate, build consensus in order to tackle the issues. I can assure you that we are working on this issue,” Chinamasa said without elaborating.
Starved of foreign investment and donor funding, Zimbabwe’s economy has been sluggish since accelerating at near double-digit rates between 2009-2012, when it emerged from a decade of recession.
The public wage bill has been a source of friction with the International Monetary Fund, which sent a delegation to Zimbabwe this week to audit the nation’s fiscal health.
IMF country representative Domenico Fanezzi said the bill accounted for 20 percent of the country’s $14 billion GDP and urged the government to channel more money to infrastructure development and health services.
“The wage bill is plainly unreasonable. I don’t think Zimbabwe can afford such a high wage bill,” said Fanezzi, the first IMF head of mission to Zimbabwe in a decade.
Chinamasa ruled out retrenchments when presenting his 2014 national budget although he conceded that the wage bill needed to be reduced to more sustainable levels.
The minister said he would bring the salaries budget down from 75 percent of revenues in 2013 to about 30 percent by 2018.
This would be achieved, not through retrenchments, but by growing the economy and widening the government’s tax base, Chinamasa said.
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