Zim to cut wage bill by $200 million

HARARE – Finance minister Mthuli Ncube says government’s cost containment measures will see the 2019 and 2020 National Budgets reducing the annual wage bill outlay by around $200 million and $130 million, representing 0,7 percent and 0,4 percent of gross domestic product (GDP) respectively.

“Wage bill containment measures will include moving away from an unfunded Pay-As-You-Go pension arrangement by adopting a funded Defined Benefit Pension Scheme in line with best practices in other jurisdictions,” he said while presenting the Transitional Stabilisation Programme (TSP) last week.

The policy document will anchor Zimbabwe’s economic development agenda over the period October 2018 to December 2020.

Ncube said other measures involve rationalisation of posts in the public service, curtail acquisition and provision of vehicles by State, including replacement of condition of service vehicles.

“Reform of the public service programme recognises the need to reform the civil service which currently constitutes a disproportionate share of total government expenditure.

“To this end, the civil service will be recalibrated to propel the country to greater heights of prosperity for all citizens,” he said.

The newly-appointed Treasury boss indicated that the country requires austerity measures aimed at addressing fiscal and debt challenges for sustained macro-economic stability and growth.

He said some of the reforms will be painful but required to achieve set goals.

Earlier in the week, government imposed a two cents tax on all electronic transactions per dollar, reversing from five cents per transaction, move that both individuals and corporate has expressed mixed feelings over.

That has also seen average selling prices of several goods and commodities increasing by about 10 to 15 percent.

But Ncube indicated that to correct the current economic situation, some reforms will be painful and the two cents tax will allow for the mobilisation of domestic savings and investments.

“We can’t do the reforms without pain, but it is something that will be there in the next two to three years and would have stabilised.

“Tax measures we used are no longer effective in the current economy as the economy is now heavily informalised,” he said.

Ncube said while the TSP measures to tame the fiscal deficit will be gradual, Treasury will in the interim resort to non-inflationary financing mechanisms for the deficit. — The Financial Gazette

Comments (2)

$200mill only? Should be by $1 billion!

jake - 9 October 2018

$200 million of cuts will take care of just 5% of the civil service wage bill of 3,6 billion annually. Much more must be cut!

citizen - 9 October 2018

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.