Gvt To Cut Public Sector Wage Bill From Current 80 % Down To 40% Of Total Revenue

Finance minister on Thursday said government plans to cut the public sector wage bill to 40 percent of total revenue from the current 80 percent.

The development signals a move to reduce the government’s bloated civil service, amid a lower economic growth forecast of 1,5 percent from the initial 3,2 percent.

Presenting the Mid-Term Fiscal Review in Parliament on Thursday, Patrick Chinamasa said 83 percent of government’s $2 billion costs were going to the salaries of its 554,000 employees.

The reduction of the wage bill is a key government target under the International Monetary Fund-monitored Staff Monitored Program (SMP), as it seeks to reform in a bid to unlock foreign funding.

A previous attempt to reduce the wage bill by removing bonuses for civil servants earlier in the year was reversed by populist President Robert Mugabe, who publicly rebuked Chinamasa for not consulting him over the pay measure.

“Cabinet has given a directive to the minister responsible for the public service and the minister responsible for finance to urgently propose remedial measures to gradually bring down the share of the wage bill in the budget from over 80 percent to under 40 percent,” Chinamasa.

“Cabinet will be considering the full package of necessary proposals in the next couple of the weeks.

“The above interventions to manage the wage bill are meant to create the fiscal space necessary to enter medium to long term growth for sustainable platform for improved remuneration.”

He said civil service commission has already completed the physical headcount for all civil servants.

The finance minister also lowered revenue projects in the wake of company closures and job layoffs triggered by the lowest economic activity in five years.

The country’s economy is suffering from power shortages and lack of foreign investment, while companies are cutting jobs as they struggle to pay salaries.

The World Bank says the economy will post 1 percent growth but economic analysts are less optimistic, with some predicting Zimbabwe could tip into recession later this year.

Highlighting the effects of the slowdown, Chinamasa cut revenue estimates to $3.6 billion from $3.99 billion this year.

The government would have to borrow $400 million from domestic and foreign sources to cover for the budget deficit, he said. The state had initially planned to borrow $125 million. source-newzimbabwe