We can't afford to pay retrenchees — Gono

HARARARE - Zimbabwe's Reserve  Bank has no current capacity to pay retrenched workers due to liquidity challenges, governor Gideon Gono has said.

Last year, the Central Bank retrenched 1 450 employees as part of cost-cutting measures.

The retrenchment exercise followed the institution’s discontinuation of quasi-fiscal activities it had engaged in at the height of Zimbabwe’s economic decline.

The central bank — which lost its lender of last resort status at the establishment of the multiple currency system in 2009 — is saddled by a $1,1 billion debt.

“The bank is powerless and it doesn’t have resources to pay them,” Gono told businessdaily, adding that; “the plight of former workers is a sad one that troubles my mind.”

As part of the agreement that paved way for the retrenchments, the RBZ agreed to pay the former workers a lump sum of $5 000 each.

It promised to settle the packages in two instalments.

It also agreed to cover medical and funeral expenses for six months and undertook to pay school fees for two terms to employees who enjoyed that privilege.

While the RBZ is still to fully pay all the former workers, it defaulted on the medical aid and funeral cover payments.

Frustrated by the continued failure by the central bank to own up to its pledged obligations, the retrenched workers recently sought Deputy Prime Minister Arthur Mutambara’s intervention.

However, Gono said the retrenched employees have been paid more than those who are still employed by the bank.

“Those who remained have not been paid equivalent to the period the former workers left the bank. In reality, the former employees have received more than those who remained, including the governor (himself),” Gono said.

Critics blame the RBZ’s quasi-fiscal operations for incurring the massive debt.

The quasi-fiscal operations forced the institution to print money to fund various non-core activities including elections, acquisition of farm implements and purchase of luxury vehicles for government officials.

The debts include approximately $610 million spent on seed, grain and fertiliser imports, a $200 million support facility for Air Zimbabwe, about $100 million spent on power imports as well as the $198 million used on the farm mechanisation programme.

But, Gono argues that the expenditure was necessary to help mitigate the worst effects of sanctions imposed by the West, adding that all the programmes funded were at the request of successive finance ministers. - John Kachembere

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.