'Exchange rate won't determine salaries'

Government will continue to engage civil servants and adjust their salaries against the prevailing inflation levels not the foreign currency exchange rate, Finance and Economic Development Minister Professor Mthuli Ncube has said.

Responding to questions in Parliament on Wednesday, Prof Ncube said Government cannot benchmark its workers' salaries on the RTGS dollar exchange rate to the United States currency.  

"First of all, when you think of salary adjustments for the civil servants, we never benchmark to an exchange rate to the USD in which case he's used a parallel market rate of 1:8. We don't do that. We try to bench mark salaries to the inflation level and that is how it ought to be done.

"Secondly, should we give civil servants an increase in line with the exchange rate which some Members of Parliament are mentioning? The answer is no. We'll continue to engage the civil servants and it will be an increase that begins to ameliorate against the current levels of inflation and we'll continue to engage them so that we can adjust their emoluments both in monetary and non-monetary terms," said Prof Ncube.

He said Government has surplus revenue in both RTGS and US dollars, which has benefited civil servants and other humanitarian needs such as Cyclone Idai.

"In RTGS currently and cumulatively, our surplus is about RTGS$600 million. If you divide that with the current exchange rate you get about US$$100 million.

"Having a surplus stops growth in money supply which in the long run will contribute towards a stabilisation of inflation. The surplus is being used to cushion civil servants in terms of higher wages. In January, we gave them a cushioning of RTGS$63 and an additional RTGS$400 million from April 1, 2019 to December.

"We're also using the surplus for social protection programmes starting with Cyclone Idai. We have allocated $100 million towards that process but also, we are using the surplus for the usual social protection programmes such as the food programme in both rural and urban areas," said Prof Ncube.

He said the surplus revenue was also being used to support other social services such as the Basic Education Assistance Module (BEAM).

"In addition to that we're going to use the surplus for importing food. We have already issued out a tender through the Grain Marketing Board (GMB) to import additional food to deal with the impact of the drought. So it is being used in these areas," said Prof Ncube.

Earlier, Parliamentarians had requested Prof Ncube to explain how Treasury was making surplus revenue yet inflation was increasing at an alarming rate.

"In his quarterly address to us, Prof Ncube mentioned that he had received income of 8, 2 percent. In the very next breath, he mentioned that there was 66 percent inflation. How can he claim to have a surplus when all those were figures of collection, 8 percent versus 66 percent?

"For example, if one is receiving a salary of $2 000 and they have got the exchange rate moving by 8, which means their salary is now $250. Now, if you've got a surplus, why have you not given the civil servants a very meaningful increase," asked Harare North MP Allan Markham.

Mutare Central MP, Innocent Gonese asked the Minister if the surplus was of any real benefit to Zimbabweans looking at the standards of living that were deteriorating.