No cuts to Zim's public sector wage bill

HARARE - 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 (7)

I agree with Pats for once. A massive job cut would be cataclysmic. Where will those people go? There are also social implications to consider which I think IMF overlooked. If they want to help they should give us a package that will stimulate industrial growth to create private sector jobs and allow us to offload public sector workers to the growing private sector.

Marshall - 27 March 2014

The Finance Minister should address the question of ghost workers as a matter of urgency why should the innocent suffer because of people who are employed to do nothing

Nyamhangambiri - 27 March 2014

the whole issue is on flushing ghost workers ( ZANU (PF) functioneries) on the civil service voter,s roll.

Mari Manyemba - 27 March 2014

Its not just ghost workers, its political party employees, ministers small houses, the inflated but unnecessary military, police recruits and all. They should go where they came from in the first place. We all have where we came from, in the first place. This is some infamous statement by Mugabe during the Mrambatsvina haulocost.

top heavy - 27 March 2014

Ma Comrades, should be spelt holocaust

top heavy - 27 March 2014

We want money that does not belong to us yet we want to set our own conditions. It's like a team that is playing their match away but insists on taking its ground to the away team. You can't force your conditions on IMF and still benefit from them. Better leave them alone.

Regalia - 27 March 2014

Why cant the police stop recruiting. They are doing nothing to the benefit of the country but in steady they are involved in corrupt activities. 5 roadblocks from Zengeza to Mbare hakusi kushaya zvekuita here ikoko.

masharks - 28 March 2014

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