Wage bill balloons to alarming levels

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RECURRENT expenditure has gobbled a staggering 92,5% of government revenue, leaving just 7% for crucial capital projects with wages chewing 81,5% of income, Finance minister Patrick Chinamasa has disclosed.

Kudzai Kuwaza

In his presentation yesterday at the ongoing pre-budget seminar for MPs in Victoria Falls, Chinamasa said recurrent expenditures continue to crowd out the country’s capital outlays.

“Over 92% of the (2014) budget is consumptive. This clearly is not a developmental budget,” Chinamasa said. “The constrained nature of the budget implies underfunding of critical developmental projects and other social services necessary for sustained economic growth. Such projects include provision of health services, water infrastructures, road rehabilitation and maintenance, power generation, among others.”

Chinamasa told the legislators it was important to consider the limited fiscal space in crafting the 2015 national budget to be presented later this month.
“Furthermore, in view of the liquidity challenges in the economy, reliance on domestic borrowing will be limited.”

Chinamasa projected a 3,2% growth in 2015 underpinned by major contributions by agriculture projected to grow by 3,4%, mining (3,1%) and tourism (4,1%).

He said revenue from the period January to September 2014 amounted to US$2,73 billion against US$2,82 billion in the same period in 2013, a 3% decline.

Chinamasa said revenue collections as at October 29 2014 indicate underperformance with collections amounting to US$289,4 million against a target of US$336 million.

Reserve Bank governor John Mangudya told the MPs that total bank deposits have increased from US$1,36 billion in 2009 to US$4,94 billion as at September 30 2014.

He said the banking sector has in addition to deposits mobilised external lines of credit, adding that out of an approved US$2,57 billion, US$460 million has been utilised.

Twelve of the country’s 21 banks were profitable with losses in the remaining banks attributed to a high level of non-performing loans, which are over US$700 million, and escalating overheads among other challenges, Mangudya said.

Zimbabwe’s economy, reeling from low aggregate demand, falling production and a liquidity crunch, among a plethora of other problems, is now technically in recession after two successive quarters of negative growth.

5 thoughts on “Wage bill balloons to alarming levels”

  1. Tawanda says:

    I think the first thing to do is for the government to conduct an audit to remove ghost workers from the payroll, i assure you that expenditure on staff salaries will reduce by more than 25%, then there is need to reduce on spending on motor vehicles whats the use of purchasing a vehicle which cost more than $5000.00 on A service, need to get vehicles which are cheap to maintain. Government should leave within its means not this overspending, it doesnt help at all.

  2. Fox says:

    I don’t get it. Everyday it is said there is a liquidity crunch but the Reserve Bank says bank deposits have trebled in 5 years. Unobva washaya kuziva kuti zvirikumbofamba sei?

  3. Buffalojump says:

    Claim bankruptcy. Other countries have done it. Start over and hopefully social and economic development will occur. You cannot develop when there is no flexibility in the budget.

  4. The Black Aristocrat says:

    All sadly predictable.

    If you visit Zimbabwe and actually get around to the countryside, you’ll discover third world conditions. People still carry water. The quality of the infrastructure is a shadow of that handed over to Zanu PF in 1980.

    Zimbabwean commodity profits are ‘invested’ by Zanu PF apparatchiks and kleptocrats in Far East and South African real estate, Private Jets, 50 bed mansions and High Street bling.

    I challenge anyone to name any Zimbabwean product, industry, or business leader worth buying, investing in, or employing. There is no business ethos beyond range of the moment gain and looting.

    Don’t bore me with tobacco production – I am speaking of any private industry that makes a single world class product – there isn’t anything to speak of. And that’s not going to change anytime soon.

    Mugabe and his Government are simply third world commodity looters and are accorded the same respect by investors as any banana republic – avoid like the plague !

  5. The Black Aristocrat says:

    All sadly predictable.

    If you visit Zimbabwe and actually get around to the countryside, you’ll discover third world conditions. People still carry water. The quality of the infrastructure is a shadow of that handed over to Zanu PF in 1980.

    Zimbabwean commodity profits are ‘invested’ by Zanu PF apparatchiks and kleptocrats in Far East and South African real estate, Private Jets, 50 bed mansions and High Street bling.

    I challenge anyone to name any Zimbabwean product, industry, or business leader worth buying, investing in, or employing. There is no business ethos beyond range of the moment gain and looting.

    Don’t bore me with tobacco production – I am speaking of any private industry that makes a single world class product – there isn’t anything to speak of. And that’s not going to change anytime soon.

    Mugabe and his Government are simply third world commodity looters and are accorded the same respect by investors as any banana republic – avoid like the plague !

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