Fears over Zimbabwe government salaries, 25000 face retrenchments

By Bloomberg

Zimbabwe may soon not be able to keep paying government workers, and is planning to cut 25000 civil service jobs in order to reduce a huge wage bill that consumes almost 97 percent of the budget.

Finance Minister Patrick Chinamasa presented the country’s mid-term budget this week saying the state planned to cut 25000 government jobs, or more than 8 percent of civil servants, to reduce the state wage bill as fears mounted that Zimbabwe could fail to pay civil servants.

“The outlook suggests government may not be able to meet its payroll obligations,” Chinamasa said, adding that government had been staggering civil service and armed forces pay days in an effort to meet its obligations.

Minister  Chinamasa told parliament that some wages would likely go unpaid later this year because money may not be available. Civil servants and soldiers have repeatedly been paid late in recent months as the government struggled to meet scheduled paydays, sparking protests including a strike on July 6 that shut down much of Zimbabwe.

Zimbabwe is experiencing its worst economic crisis since the hyper-inflationary period that peaked in 2008, when inflation soared to 500 billion percent, according to the International Monetary Fund. Now, after it switched to use of the U.S. dollar in 2009, a shortage of currency, deflation and unemployment of about 90 percent have plunged the country back into crisis.

The Finance Ministry wants to trim the number of state workers to 273,000, which will reduce the proportion of salaries to total revenue to 75 percent by December 2017, according to a budget document. While still high, it will be a “significant improvement on the current unsustainable situation,” the ministry said.

“We have started the process of auditing of civil servants so that we can identify the number of people to be retrenched,” Priscah Mupfumira, Zimbabwe’s public service minister, said. The government has implemented a ”freeze on all new appointments,” she said.

The latest push comes after previous attempts to trim government employees were reportedly thwarted by President Robert Mugabe’s cabinet, even as the percentage of revenue gobbled up by pay climbed from 83 percent earlier this year.

Apart from deferring civil service bonuses for 2016 and 2017, newspapers in Harare reported that Zimbabwe could be forced to close some embassies in an effort to save money. The moves could save Zimbabwe at least $335 million annually during the next two years, the newspapers said.

Zimbabwe owes foreign and domestic institutions about $9.6 billion and failed to make a $1.8 billion payment due to lenders in June. Chinamasa said he expects the economy to expand about 1.2 percent this year.



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