HomeBusiness DigestSalaries push debt to $15,7 trillion

Salaries push debt to $15,7 trillion

Eric Chiriga

GOVERNMENT domestic debt, which had marginally declined since the beginning of the year, increased by more than $2 trillion to settle at $15,7 trillion

in March, figures from the central bank revealed.

Economists warned that the debt was likely to increase further because of the hefty salary increments which the government recently awarded to civil servants.

The salary increases are set to push up government’s wage bill to well over 50% of gross domestic product.

According to statistics from the Reserve Bank of Zimbabwe (RBZ), the total domestic debt stood at $15,7 trillion as at March 24, an increase of $2,49 trillion from $13,23 trillion on March 17.

On February 24, the domestic debt was $14,2 trillion, dropping marginally to $13,7 trillion on March 3.

It had reached a high of $15,9 trillion at the end of last year, having opened the same year at $3,3 trillion. Economist John Robertson said the debt was likely to balloon since government did not have the resources to fund the new salaries.

“Government will be forced to borrow again or print more money to pay the salaries,” Robertson said.

He said if government decided to borrow, the debt would certainly grow while money printing would aggravate inflationary pressures.

The government recently printed $21 trillion to pay the International Monetary Fund debt, a move many observers said had helped stoke inflation, which reached over 900% year-on-year for March.

The government’s domestic debt consists of stocks, treasury bills and central bank advances.

Local economists and analysts have blamed government borrowing for recurrent expenditure for causing high inflation.

Central bank governor, Gideon Gono, said last year that total government debt had become unsustainable after having grown by over 1 000% during the period from January to October.

The government has resorted to the domestic market to finance its budget due to lack of financial support from bilateral and multilateral donors.

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