Cut running costs, Govt urged

via Cut running costs, Govt urged | The Herald October 26, 2015

THE Southern African Parliamentary Support Trust says Government needs to significantly cut recurrent expenditure in the 2016 national budget to spare resources for capital projects. SAPST executive director Mr John Makamure said more than 80 percent of the current national budget goes to pay running expenses; leaving very little for infrastructure and capital projects. Government spent a total of $2 billion in the six months to June with $1,554 billion going to recurrent expenditure; mostly meeting the costs of public service wages and salaries.

In terms of that expenditure $190 million was spent on operations, $30,4 million interest, $27,8 million infrastructure, $84,1 million agriculture, $58,6 million AMA Bills, $18,5 million grain procurement, $6,9 million grain inputs, $183 million repaying loans and $11,3 million others. This came as Finance Minister Patrick Chinamasa reviewed revenue projections from the $4,1 billion he announced in November last year to $3,6 billion due to poor tax revenue inflows.

In addition Mr Makamure said the limited financial resources also mean that law makers must help the minister to prioritise expenditure to key sectors such as health, education and key infrastructure by foregoing areas that can be put on hold without disrupting public programmes.

Orienting Parliamentarians on their role in national budgetary process, Mr Makamure said Members of Parliament play a major role in budgeting such as formulation, implementation monitoring and oversight of the plan. As such, he said there was need for the legislators to proffer innovative ways to help the minister to find ways to reduce the country’s unsustainable public service wage bill.

“The wage bill is taking more than 80 percent of the total budget, there is little for other Government operations. If all goes to pay Government salaries how does Government function? “You (MPs) need to come up with sound advice because the minister has to manoeuvre . . . there is what is called non-discretionary expenditure; there is nothing you can do about it,” he said.

Reduction of recurrent expenditure, especially salaries and wages, is one of the key focus areas under Government’s staff monitored programme with the International Monetary Fund to rebuild conditions for financial help to the country. Zimbabwe last received financial assistance from Bretton Woods institutions at around 2 000 when it started defaulting on its obligations, as the economy started wobbling.

Mr Makamure said as things stand the minister has no option but budget for the running costs.

He called on MPs to debate how this can be corrected when they convene in Victoria Falls for the 2016 national budget formulation. The SAPST director believes MPs need to look at solutions that include ways to grow the economy to expand the taxation base, restructuring the public sector to address the wage bill. Further, he said MPs may also need to advise the minister of finance on how he can boost non-tax revenue to increase resources available for infrastructure and capital investment.

Tax revenue accounts for 96 percent of Government annual revenue, but this is fast dwindling as most companies are struggling due to the difficult economic environment. He said since Government is already seized with the matter, MPs need to look at whether the measures are sufficient and possibly propose more alternative to resolve this. Mr Makamure urged the law makers utilise Constitutional provisions allowing them to participate in the formulation, implementation and evaluation of public income and expenditure.