‘Civil service wage bill to gobble 91% of revenues’

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Finance Minister Patrick Chinamasa

Finance minister Patrick Chinamasa yesterday painted a gloomy picture of the economy amid revelations that the cash-strapped government will next year spend US$3 billion on employment costs, leaving only US$400 million for current operations, capital and social projects.

By Fidelity Mhlanga

Finance Minister Patrick Chinamasa

Finance Minister Patrick Chinamasa

Chinamasa said government would next year run a deficit of US$400 million.

“Employment costs will take up US$3 billion, leaving only US$400 million for current operations, and US$180 million for debt service, out of the overall proposal for recurrent expenditures of US$3,58 billion,” Chinamasa said.

A total US$2,63 billion has already been consumed from January to October in employment costs.

This figure represents 91% of government’s total revenues.

The runaway expenditure on employment costs leaves only US$520 million (14% of total revenues) for capital development programmes.

Although the 2017 budget provision of US$3 billion for employment costs represents a decline from the estimated out-turn of US$3,14 billion for 2016, this means government will be incapacitated to carry key capital projects to improve the economy.

Chinamasa said the anticipated lower provision on employment costs by an estimated US$140 million was reflective of financial savings arising from the implementation of the public service wage bill rationalisation measures.

The desired levels of annual expenditure on the capital budget, supportive of effective implementation of government’s moribund economic blue-print, ZimAsset projects, are US$5,4 billion.

The fiscal framework of revenue collections of US$3,7 billion in 2016 against projected expenditures of US$4,1 billion presents a financing gap of about US$400 million, which is 2,7% of Gross Domestic Product, for the proposed 2017 budget.

While it remains a mystery as to how the government will raise revenue given the harsh economic situation, Chinamasa proposed to allocate US$803 million, US$281 million, US$364 million for Education, Health and Home Affairs ministries respectively.

Agriculture was allocated US$244 million while Higher and Tertiary Education got US$208 million.

Public Affairs was allocated US$193 million.

Chinamasa said restrictions on hiring, continuous monitoring and audits for flushing out ghost workers, as well as the restructuring of the public service are essential measures which will be maintained in order to manage the wage bill as a key component pushing up expenditures.

Economist John Robertson said achieving a 1,7% growth was a pipe dream given that all revenues will be expended on salaries at a time of low investment inflows into the country.

“Economic growth could only be talked about if there is increasing foreign investments coming in the country. We don’t expect any inflows since there is no ease of doing business in the country,” Robertson said.

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