Mthuli Ncube cuts wage bill to below 50%

THE Government has managed to bring down the proportion of the public wage bill in the national budget from 92 percent in 2017 to below 50 percent, resulting in fiscal surpluses that have been invested in other key areas, Treasury said in a recent update.

The progress report contains a summary of the extensive progress the New Dispensation has recorded on a wide range of economic and Government reforms since coming into power in November 2017.

The Government promised to eradicate corruption and other forms of vices that have been scuppering efforts to turn around the economy and indeed it has lived to its word.

Significant milestones have been recorded on reforms cutting across disciplines that include the general economy and specifically areas such as mining, key infrastructure (roads, airports, new parliament building), education system, agriculture, power generation, political and legal systems.

Most of the reforms thus far have come through under the transitional stabilisation programme (TSP), which ends this year and will be succeeded by the first five-year development plan.

The TSP sought to achieve macro-economic stability, lay foundation for private sector led sustainable growth, further democratise the country, normalise international relations, develop infrastructure, improve public and social service delivery and provide social protection.

According to the update statement, "public wage bill (is) now below 50 percent of total revenues from 92 percent in 2017", which creates funding space for other critical areas like capital and social service programmes that infrastructure, healthcare service and education services.

Measures that have been instituted to streamline public expenditure on wages and salaries, have included rationalisation of posts and freeze on hiring except for critical areas like healthcare.

Further, Treasury also said there has been roll-out of "public finance management system to all departments" while new procurement rules were introduced to curtail wasteful spending.

As part of expenditure containment and supporting the monetary policy on containing money supply and inflation, Treasury said it had discontinued recourse to borrowing from the central bank.

Where Treasury required resources for critical Government expenditure, this has had to be raised through controlled issuance of instruments such as Treasury Bills (TBs).

Coupled with that has been health growth in tax revenues, which have seen monthly expenditure deficits turned into surpluses, which totalled $395 million by December 2019 and $800 million for the period January to June 2020.

"The surpluses serve as a buffer to shocks such as the impact of Cyclone Idai, drought and Covid-19 pandemic.

"Surpluses are also supporting social service delivery, social protection and infrastructure development."

In 2019, the International Monetary Fund noted the Government's commitment to realign fiscal expenditure, which it said has largely focused on containing the public wage bill through restrained wage adjustments.

"As a result, savings were generated from a 5 percent pay cut in the salaries of senior Government officials, rationalisation of the civil service, and the limiting of the civil servants 13th cheque to the basic salary.

"The authorities also introduced biometric verification of civil servants, which is expected to help further contain the wage bill.

"They halted expenditure overruns to rein-in the budget deficit and scaled back central bank borrowing."