Zimbabwe to cut public sector wage bill

An economic-recovery programme approved by the Zimbabwean cabinet will aim to cut the country’s public-sector wage bill and reorganise its bloated civil service over two years, the Ministry of Information said in a statement today.

The cabinet adopted Finance Minister Mthuli Ncube’s “transitional stabilisation programme” at its weekly meeting yesterday, the ministry said.

President Emmerson Mnangagwa, who was re-elected on 30 July, is under pressure to quickly repair an economy shattered during the nearly four decades the country was ruled by Robert Mugabe, who was removed in an army coup last year in November.

The plan, whose full details will be announced on Friday, includes “rationalisation of the civil service so as to reduce the unsustainable public sector wage bill” and “diverting government resources from recurrent expenditure to productive activities”.

Zimbabwe spends more than 90 percent of a $4 billion national budget on salaries, allowances and pension for the public sector. Foreign lenders like the International Monetary Fund say that’s unsustainable.

The Finance Minister will lead Zimbabwe’s delegation to the annual meetings of the IMF and World Bank in Indonesia next week, where he will present Harare’s plans to clear more than $2 billion in foreign arrears.

Ncube, a former senior executive at the African Development Bank, said this week that government borrowing of billions of dollars through treasury bills and a central bank overdraft were feeding a dangerous fiscal deficit.

On Monday, Ncube imposed a 2 percent tax on electronic and mobile money transactions as part of efforts to raise money to reduce the budget deficit, which reached 16 percent of gross domestic product in 2017. – The Source

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