Govt jobs freeze saves $10 million monthly

The government claims it is saving in excess of $10 million each month following its job freeze imposed a few years ago.

Finance ministry secretary Willard Manungo yesterday told the Parliamentary Portfolio Committee on Finance yesterday that the job freeze was among a raft of measures introduced to manage government's wage bill, which he said had now dropped from 85% to 65% of total revenue.

"The bid taken by government to try and contain recurrent expenditure, especially that to do with the wage bill, is that we are now saving $10 million per month in terms of how much we are spending on employment costs," he said.

"However, the revenues have not responded positively and there is still a mismatch between expenditure and revenue realisation, and the biggest challenge remains the issue of employment costs, where we continue to spend 65% of the budget just on wages," he said.

He, however, said some ministries such as Education and Health were allowed to recruit, though on a small scale to fill in critical gaps.

"In the health sector, we allowed for employment of 2 000 nurses, mindful of the challenges, and in education, 10 000 additional teachers were required, but we allowed for an extra 2 000 to try and ensure that at classroom level, there is an element of order," Manungo said.

He said the salary bill for the education and health sectors alone was $1,4 billion out of the $3bn government salary bill, with education accounting for $1,1bn and health $275 million.

"These are reflected in the increase in the number of Treasury Bills to finance government borrowings," he said.

Manungo said the economy was on the rebound, with gross domestic product growth now revised upwards to 3,7%, up from 1,7%.

Addressing the same committee, Reserve Bank of Zimbabwe governor John Mangudya said the fiscal and current account deficits had impacted on the balance of payment, adding it was exerting excess pressure on foreign currency availability.

He said shortages of cash in the country were a sign of excess demand on foreign currency.

"We have domesticated use of dollarisation since 2009 and simultaneously, we should have policy measures to improve the supply of that forex," Mangudya said.

"We are using foreign currency for purchases, importing fuel and electricity and raw materials, and shortages of foreign currency are a symptom of challenges affecting the economy."

The Reserve Bank boss said some of the challenges include the fiscal deficit, market indiscipline, slow productivity, as well as relying on imports, which meant the country was using foreign currency for consumptive purposes.

Mangudya said as long as the use of real time gross settlements was more than the foreign currency available, there would continue to be a mismatch, and it would result in nostro accounts being used for foreign payments.

He said foreign currency must be put for productive purposes, adding the measures being put to curb financial leakages included promotion of use of plastic money, foreign currency generation, setting withdrawal limits, nabbing traders that avoid banking and invoking the Bank Use Promotion Act on defiant traders.