Chinamasa in wage bill headache

Government is still struggling to contain its wage bill as it emerged that this expenditure accounted for 86 percent of its overheads in the first month of the year.

President Robert Mugabe's administration, under pressure to live within its means, has previously pledged to lower its salary bill to 40 percent of total expenditure.

But with elections fast approaching next year, it doesn't appear government has the political will to slash the wage bill, lest it may infuriate its workers.

A consolidated statement of financial performance of the Consolidated Revenue Fund for the month of January, released by the Finance ministry accountant general Daniel Muchemwa, showed that government is indeed struggling to contain the wage bill.

Muchemwa said while expenditure for the month under review stood at $308 million against a budget of $362 million — leaving a $54 million variance — public sector salaries continued to gobble the bulk of the budget.

"Major costs incurred related to employment costs amounted to $238 million, which is 86 percent of total expenditure," said Muchemwa.

The development piles pressure on Finance minister Patrick Chinamasa who, in his 2015 mid-term fiscal statement, announced government's intention to reduce the wage bill from an average of 80 percent to 40 percent on wages in the long-term.

An albatross around Chinamasa's neck, the public sector wage bill is anticipated to gobble $3 billion this year, leaving only $400 million for current operations, capital and social projects.

It is being projected that government will run a deficit of $400 million this year.

Already, the parliamentary portfolio committee on Finance and Economic Development has recommended that government carry out a restructuring of the civil service and reduce the wage bill to 70 percent of the budget within the first quarter of the year.

This comes as the International Monetary Fund (IMF) head of delegation to Zimbabwe, Ana Lucia Coronel — who was in the country recently to hold discussions with government, private sector representatives and civil society for the 2017 Article IV Consultations — also cautioned the country against splurging on salaries and wages.

". . . Excessive government spending, if continued, could exacerbate the cash scarcity, further jeopardise the health of the external and financial sectors, and, ultimately, fuel inflation.

"Spending pressures stem from high employment costs, government transfers to support specific economic sectors, and elevated discretionary expenditure . . . Reinforcing the government's efforts to curtail non-priority spending is also pressing," Coronel said, adding that reducing the wage bill could involve reviewing allowances and benefits and evaluating the size of the civil service with a view to eliminating non-essential posts.

Meanwhile, Muchemwa said government spent $9 million on goods and services against a budget of $14 million.

"Majority expenses incurred by line ministries were not paid for due to cash flow constrains faced currently by the government of Zimbabwe.

"Cash generated is inadequate to meet current obligations. Acquisitions of various capital expenditure (vehicles, furniture and equipment) amounted to $3 million against budgeted $15 million due to limited available cash resources," the accountant general said.

He said in January, government made capital transfers to recently-acquired pharmaceuticals concern CAPS Holdings, worth $7,5 million, with $46,3 million going to the Grain Marketing Board and the Zimbabwe Revenue Authority receiving $712 000 from Treasury.

In the month under review, government recorded a $30 million deficit against a budgeted deficit of $84 million.