Chinamasa reforms 'long overdue'

HARARE - Finance minister Patrick Chinamasa’s move to suspend civil servants’ bonuses and trim the bloated public service was “long overdue”, economists have said.

In his belated 2016 mid-term fiscal review — traditionally presented in July — the Treasury chief announced the retrenchment of government workers and suspension of civil servants’ bonuses for two years — 2016 and 2017.

Though the game-changing reforms riled some government workers, who threatened to protest in defiance, business leaders and economic analysts told the Daily News that Chinamasa had “taken a step in the right direction”.

“After everything, I will say that the minister’s measures are a step in the right direction,” businessman Shingi Munyeza — who has been vocal in demanding that government lives within its means – said, although adding that Chinamasa’s reforms were “not enough”.

Munyeza — the franchise holder of Ocean Basket and Mugg & Bean in Zimbabwe — said Chinamasa’s efforts were “commendable, but needed to be supplemented”.

“While we expected this to happen earlier, the minister has showed that he is sincere about containing the country’s unsustainably high wage bill. Of course, the move will not save a lot, but $180 million by year end, he is definitely moving in the right direction,” he said.

The civil service wage bill gobbles more than 80 percent of Zimbabwe’s national budget, which stood at $4,2 billion this year.

As part of measures to curb government’s unsustainable expenditure, Chinamasa announced the taxing of civil servants' allowances with effect from October, along with a rationalisation of the county’s foreign service missions.

Zimbabwe — presently drowning in a $623,2 million budget deficit as of June 30, against an annual projection of $150 million — is expected to save $155 million by the end of 2017 after axing

25 000 workers.

According to Chinamasa, the bonus suspension will translate to savings of around $180 million per annum, but he said even after implementing all those measures, the monthly wage bill will still remain high at $245 million — 76 percent of revenue.

Respected economist, John Robertson, concurred with Munyeza saying while Chinamasa’s move was long-overdue and it was what the country needed.

“We expected this last year. When the minister announced he was going to cut the wage bill by 40 percent… as it is now; the development is a little late. But it is better late than never,” he told the Daily News.

“Chinamasa also needs to stimulate revenue collections through putting in place measures that can boost local production. This way, the restructuring reforms will be supported by a productive industry as well as higher revenue collections,” Robertson said.

Issis Mwale, also an economic analyst, said the Treasury chief’s reforms were “very sober minded”.

“...Chinamasa’s reforms could not have come at a better time. After all, government has been struggling to pay last year’s bonuses through the first half,” she said.

“If populist politicians leave the minister to his devices, we can actually have a reasonable budget deficit in the future,” Mwale said.

According to Chinamasa, the country’s first half revenue collections stood at $1,8 million — 9,8 percent below target — and with expenditure standing at $2,3 billion against a target of $2 billion, government had overshot budget by $308,4 million, with the huge wage bill causing the overshot.

However, there are fears that Chinamasa's populist principal, President Robert Mugabe, will reverse the key and progressive reforms, as he has done before.

“He (Mugabe) is pathetically populist and in his desperate attempt to cling to power may dampen Chinamasa’s hard work with the re-engagement process,” the candid Robertson told the Daily News earlier.

Comments (8)

Minister Chinamasa has made a good start but a lot of reforms are urgently needed. These include privitization of most parastatals, recapitalisation of local banks, zero tolerance to bad governance in private and public sectors, listening to the Auditor General and strengthening tax collection and so. Discipline needs to start from the top and cascade down to the lowest people. Productivity on farms needs to be improved. Bring back title deeds to strengthen property rights and enable farmers to have acceptable collateral security. 99 year farm leases are just political creations to grab land for free

Edgar Muzawazi - 12 September 2016

It should be remembered that Chinamasa as head of the Exchequer initial announced the suspension of bonuses early in 2015 but that was reversed in a political rally by the President may be after getting advice from Zhuwawo,Kasukuwere etc.What followed has been witnessed by every one in the country.Nothing further to say.

Gen. Spinola - 12 September 2016

Zimbabwe economy has been slowly crumbling since 2002. This Zanu PF has had the most educated cabinet around Mugabe on the African continent. This government has project planners, economists and strategists who are well paid. What do these people do day in day out in the 36 year existence of Zanu PF government? We, layman, have seen all going wrong in every sphere of our country. What does Mugabe and his cabinet do day in day out? Mugabe has failed this country big time! Zanu PF take all arable land and now we are net importers of food. This is one many examples of Zanu PF touching a gold plated mug and it turns rusty. Zanu PF is a silver stripper mob. We have no option. Zanu PF has to be pushed out of power. They have failed us.What a shame!

Mbareboy - 12 September 2016

Zanu PF under the leadership of godfather RG Mugabe has failed this country with distinctions. That is RG Mugabe's legacy!

Mbareboy - 12 September 2016

Minister can you first of all cut all other benefits from the ministers those expensive cars, how much is a Range Rover and how much is a teacher getting ? do the mathamatics your self. How many unproductive meetings you do only to pay allowances. I am not a politician and have no party but i was tourched by this NO BONUS neither i am a civil servant. So you think if you do this it will revive the economy? or it will worsen the situation ?

Chatambudza - 13 September 2016

I am surprised by the views of the so called leading businessmen and top economists....ok the fact that the civil service wage bill is that high and taking up more than 80% of the national budget means that there's not enough revenue coming in from zimra to cover other developmental projects and that means there's not enough business to sustain the govt, there's no govt that can survive or sustain itself without the business or private sector but what we have seen in this country is that the mugabe govt policies are anti business so if you think you are balancing the budget deficit problem by retrenching civil servants, suspending their bonuses and taxing their allowances you are making a big mistake in fact you are solving a small part of the problem but creating a much bigger one. Ndiko kunonzi kukiya kiya economy ikoko. The real issues that are causing our huge budget deficit are political problems that are being dragged into the economy of the country, for example indigenization policy, this is the most stupid policy I've ever seen because basically you telling the investors to f**k off, human rights abuses, rule of law, corruption of the highest order etc are very bad for any country's economy they badly affect the economic development of any country. I don't see the measures being taken helping us in the long term, I think these guys have just failed and failed dismally!!

misty - 13 September 2016

Hazvina basa zvaChinamasa izvo.We will reverse it again parally manje manje. Tobva tatadza zvedu kuzovabhadhara macivil servants acho. Kutonga kwacho kwandinetsa problem after problem. Zvichanaka chete can comrade vakaenda kunosaina madeals eya ekuChina. Maybe eeeeh kumbotuma Chinamasa kuBritain. Aaaaaa kungofungawo kwangu kwemunhu mukuru. zvadiiko ndachembera muri kundimanikidza kuramba ndiripo kubva 2000. Ndimanikidzei muchaona moto nenhamo.

KUBA - 13 September 2016

Chinamasa is just dancing to the Bretton Woods institutions' tune. The reforms are just to appease the IMF, World Bank (who have just rode into town as we speak). Maybe next time he travels abroad with a begging bowl some trinkets and change might be thrown in. The civil service appears bloated because Mugabe and his zanu pf cabal have succeeded in killing the private sector through political misrule, knee jack economic policies, corruption and self entitlement. If Chinamasa can relay that to Mugabe and Zanu PF we could be heading in the right direction - PROVIDED THE ADVICE IS LISTENED TO AND ENFORCED. Government cannot compete with the private sector in the marketplace and win. Government's role should be formulating policy that creates a level playing field in the marketplace. They should not be competing with the private sector but be overseeing the private sector's adherence to policy. Government is not a profit making organisation and should concetrate on revenue collection from the profit making private sector. But typically zanu pf they have run down everything to the ground, stiffled the private sector, and destroyed a once vibrant agricultural and industrial sector and continues moving the goalposts to their favor in the rich resource mineral sector. Revenue collection has been reduced to next to nothing with laughable proposals as the mad professor's - All those planning to protest in the streets should pay a deposit before the event! Mugabe and his zanu pf mafia have failed dismally and destroyed once thriving economy. They should all resign! The reforms are just hot air as Mugabe and his government have no intentions to also reform. Can Mugabe reduce his foreign trips, his ministers downgrade from Range Rovers to smaller cars, address the rot in the parastatals (ZINARA, ZESA etc.), suspend Kasukuwere, Chombo and do an investigation of the Ministry of Mines, Local Government etc. with the corrupt officials being brought to book?

Daniel5 - 13 September 2016

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