Zimbabwe to cut 25 000
government jobs in bid to reduce
wage bill
It is not in doubt that Zimbabweans, many of
whom have taken to the streets in protest
against President Robert Mugabe’s
management of the economy, have no
illusions about their predicament.
But nothing could have prepared them for the
bleak set of numbers presented by Finance
Minister Patrick Chinamasa as he tabled his
mid-term fiscal policy review in Parliament
Chinamasa revealed government fears that the
economy could contract this year, despite
officials publicly sticking to a 2.7 percent
growth target until a few months ago.
“When we started the 2015/16 agricultural
season, the economic outlook was gloomy…at
that stage, revisions of the economic growth
rate for 2016 were pointing to the negative,”
Chinamasa told Parliament.
A less-than-expected decline in agriculture
and a rally in mining will, instead of negative
growth, see the economy expand by 1.2
percent, Chinamasa said.
In May, Treasury had revised the 2016 GDP
forecast to 1.4 percent. Analysts have charged
that government forecasts of growth in an
economy plagued by a bank note crisis,
drought-induced food shortages and
insignificant investment, are unrealistic.
However, what’s undeniable is that
Zimbabwe’s economy is back in crisis after a
brief respite that started in 2009 when the
country dollarised and tamed hyperinflation
as a power-sharing government that
significantly eased political tensions.
Now, the benefits of dollarisation seem to
have run out and political tensions are rising,
triggering a series of street protests and
strikes over the past few months.
Government revenues continue to fall;
collections amounted to $1.692 billion in the
first half of 2016, against the targeted $1.876
Chinamasa said he now expects full-year
revenue to be $3.755 billion and not the
initial target of $3.85 billion.
Expenditures, to June 30 2016,overshot the
budget by $308 million, to reach $2.32 billion.
Of every dollar government collects as
revenue, 97 cents goes to pay wages,
Chinamasa said, while issuing a chilling
warning. Government, which has over the
past three months struggled to pay its workers
on time, faces the prospect of a full-scale
“The outlook, based on the status quo, points
to a situation where projected revenues fall
short of meeting employment costs,”
Chinamasa said, adding that Cabinet had
approved plans to reduce the government
wage bill by $118 million by the end of 2016.
Chinamasa proposes to reduce the civil
service, which he says stands at 298 000
currently, to 273 000 by the end of 2017.
With virtually every revenue dollar going to
pay salaries, government has resorted to
borrowing, running up a $632,2 million
budget deficit in the process.
“Failure to contain the budget deficit will
worsen the situation to a year-end level of
over $1 billion,” Chinamasa told a stunned
Government had forecast a $150 million
budget deficit for 2016.
“The budget deficit is being financed by way
of borrowing primarily through issuance of
Treasury Bills. This is crowding out credit to
the private sector, thereby stifling new
domestic investment and growth,” Chinamasa
Exports amounted to $1.1 billion in the first
half, a 9 percent decline on the corresponding
period of 2015. Imports also declined to $2.5
billion up to June 2016, compared to $2.9
billion in the same period of last year.
Remittances by non-resident Zimbabweans, a
key source of liquidity, were $387.9 million in
the first half of 2016, 15 percent lower than
the $457.8 million registered in the first six
months of 2015.”
Chinamasa identified as key sources of
Zimbabwe’s economic malaise: low levels of
production and the attendant trade gap,
insignificant foreign direct investment and
lack of access to international finance due to
huge arrears.
He made a case for the continuation of
Zimbabwe’s efforts to re-engage international
capital and Western governments that fell out
with the Mugabe government nearly two
decades ago over a violent land redistribution
drive as well as charges of electoral fraud and
human rights abuses.
The re-engagement process has appeared
imperiled in recent months, amid a vicious
government crackdown on opposition protests.
Chinamasa, however, urged the government to
stay the course.
“It is therefore critical that we complete the
remaining steps on arrears clearance in order
to unlock resources from the IFIs and bilateral