News / National
Public wage bill balloons 3 times ahead of key Zimbabwe elections
02 Jul 2023 at 12:30hrs | Views
ELECTION-related spending by the Zimbabwean government is going through the roof as President Emmerson Mnangagwa goes for broke, spending public funds like confetti at a wedding to retain his position in the August presidential election.
Fiscal and monetary sources say the civil servants' bill — which in January was about ZW$100 billion (about US$50 million) a month — has now gone up well over three times as government awards salary and allowances increases to struggling civil servants — repeatedly.
Civil servants, especially teachers, want to go back to their pre-coup salary levels of US$540 a month. Government used to pay its 300 000 civil servants about ZW$100 billion a month until recently, but the wage bill has now dramatically gone up to over ZW$350 billion and continues to rise amid currency and exchange volatility stoking inflation.
With a new salary increment coming anytime, the wage bill will soon scale ZW$500 billion a month.
The government says another salary increase is imminent for civil servants. It will be accompanied by a hike in the United States dollar component of the salary and allowances in public servants' remuneration which will also go up in local currency terms.
In March, the government gave public servants a 100% salary hike and reviewed their Covid-19 allowances from US$200 to US$250, except for health sector workers.
Teachers were given an additional US$80 monthly allowance. Government pensioners' cushioning and Covid-19 allowances were increased by US$10 to US$100.
From repeated civil servants' salary and allowances increases, election-related expenditures and donations, the government is splurging money everywhere, thus increasing money supply, disposable incomes and spending, fuelling inflationary pressures.
Only yesterday, Mnangagwa intensified Zanu-PF's thinly-disguised vote-buying strategy which it has now normalised at a rally in Nyele in Bulilima, Matebeleland South province.
Ahead of the presidential rally, Mnangagwa ensured 44 boreholes were drilled.
He then donated Pfumvudza inputs, including fertilizer and seed, 10 000 chicks to 1 000 vulnerable families, began the second phase of information communication technology laboratories across Matebeleland South, with schools being given computers, extended presidential goat scheme (three goats to each chief; two goats to each headman and a goat to each village head).
Everyone who came to the rally was also given garden seed pack, including tomato, cabbage, rape, and onion.
Zanu-PF has brazenly resorted to its traditional vote-buying tactics ahead of the next elections with the recent move being the pampering of traditional chiefs with all-terrain vehicles in a development that sets on course rigging mechanisms of the elections.
All this is fuelling inflation.
Zimbabwe's annual consumer price inflation skyrocketed to 175.8% in June 2023, up from 86.5% in the prior month, marking a continued deviation from the downward trend observed since the beginning of the year.
It was the highest reading since January 2021, stoked by a sharp depreciation in the Zimbabwe dollar, which crashed 50% since the start of June in the official market.
The official exchange rate is US$1: ZW$5 739, while the parallel rate is US$1: ZW$8 400. Analysts say the local currency has depreciated 97.62% since 1 January 2022.
On a monthly basis, consumer prices jumped by a record 74.5% in June after a 15.7% rise in the previous month.
On top of this, the government will spend US$116 million on the general elections.
In his spending spree, Mnangagwa has handed over new cars to 38 newly-installed chiefs during an annual chiefs' conference held in Bulawayo recently. Also recently, the ruling party unveiled ambulances emblazoned with big facial pictures of Mnangagwa, which it claimed were donated by Zanu-PF supporters. This, again, was seen as vote-buying.
Zanu-PF officials have also been on the campaign trail, dolling out more goodies and cash ahead of the party's primary elections.
There has also been distribution of chickens, fertilizers and drilling of boreholes by Zanu-PF functionaries on the campaign trail.
The government has also been distributing inputs and food in rural areas in a partisan manner, mainly focusing on the ruling party supporters.
These current developments are an attestation of what Mnangagwa in August last year said when he unwittingly admitted that Zanu-PF uses food aid as a political tool to drum up support in rural areas.
Mnangagwa is battling it out against 10 other presidential election candidates — with main opposition CCC leader Nelson Chamisa and former Zanu-PF political commissar, MP and minister Saviour Kasukuwere being his two main opponents.
The Reserve Bank of Zimbabwe on 6 June raised its key lending rate by 10 percentage points to 150% in a bid to tame inflation and protect the country's weakening currency.
It also announced that the central bank will begin selling foreign currency at market-determined exchange rates through banks, but stopped short of allowing the Zimbabwe dollar to float freely.
However, independent economists estimate Zimbabwe's inflation is now around 1 298% annually.
Ahead of crucial general elections in August, Zimbabwe is currently experiencing a devastating third hyperinflation in 15 years, which means hyperinflation every five years.
Zimbabwe has been reeling from serious economic problems for over 20 years now. No country can restore and retain macroeconomic stability, let alone growth, under these conditions.
American applied economics professor Steve Hanke said: "On June 22, I measured Zimbabwe's inflation at 1 298%/year, ZimStat's official (read phony) inflation of (175.8% for June up from 86.5% for May). Zimbabwe is experiencing its third hyperinflation in 15 years."
Additionally, the government spent about US$100 million on underpaid civil servants' bonuses to be processed in two batches, one for the lower grades and the other for higher echelons. This came as the wage bill is shooting up again.
Finance minister Mthuli Ncube had set aside ZW$2.2 trillion for employment costs, inclusive of grant-aided institutions and pensioners, medical aid and pension contributions.
This amount includes ZW$659.4 billion and ZW$336.5 billion for salaries and allowances, for education and health sectors respectively. The share of employment costs to total expenditure is projected at 52.4% in 2023, a huge increase from US$42.3 million in 2023.
The total bill for civil servants' bonuses was US$100 million at an average of US$350 for
300 000 workers. That meant US$105 million.
Mnangagwa offered a surprise US$200 top-up for bonuses for all civil servants.
The 2023 national budget set aside resources to cover voter registration, ZW$12 billion, voter inspection ZW$11 billion and actual election conduct ZW$53 billion, among other expenses.
In a bid to appease war veterans, who always play a crucial role in Zanu-PF election campaigns, the government set aside ZW$4.6 billion to invest in farms, mining and tourism.
War veterans have over the years been demanding gratuities for their role in the liberation struggle.
In 1997, the government paid out unbudgeted lump sums of nearly ZW$50 000 (US$4 300 at the time) to war veterans following months of protests. This led to the collapse of the local currency which has never fully recovered.
In May 2022, the government announced plans to pay one-off rewards and monthly pensions to a new batch of 160 000 war veterans, war collaborators and ex-political prisoners who missed out during the first round of compensation in 1997.
Despite sometimes complaining of being neglected, war veterans have often played a crucial role in elections.
They have always been used by Zanu-PF as part of the commissariat, especially in rural areas where they have been involved in campaigns.
On many occasions, war veterans have been implicated in the intimidation and harassment of opposition members, especially during the election period.
They led farm invasions during the land reform programme, targeting white farmers, some of whom were killed.
Elections have brought huge spending and are driving inflationary pressures.
Fiscal and monetary sources say the civil servants' bill — which in January was about ZW$100 billion (about US$50 million) a month — has now gone up well over three times as government awards salary and allowances increases to struggling civil servants — repeatedly.
Civil servants, especially teachers, want to go back to their pre-coup salary levels of US$540 a month. Government used to pay its 300 000 civil servants about ZW$100 billion a month until recently, but the wage bill has now dramatically gone up to over ZW$350 billion and continues to rise amid currency and exchange volatility stoking inflation.
With a new salary increment coming anytime, the wage bill will soon scale ZW$500 billion a month.
The government says another salary increase is imminent for civil servants. It will be accompanied by a hike in the United States dollar component of the salary and allowances in public servants' remuneration which will also go up in local currency terms.
In March, the government gave public servants a 100% salary hike and reviewed their Covid-19 allowances from US$200 to US$250, except for health sector workers.
Teachers were given an additional US$80 monthly allowance. Government pensioners' cushioning and Covid-19 allowances were increased by US$10 to US$100.
From repeated civil servants' salary and allowances increases, election-related expenditures and donations, the government is splurging money everywhere, thus increasing money supply, disposable incomes and spending, fuelling inflationary pressures.
Only yesterday, Mnangagwa intensified Zanu-PF's thinly-disguised vote-buying strategy which it has now normalised at a rally in Nyele in Bulilima, Matebeleland South province.
Ahead of the presidential rally, Mnangagwa ensured 44 boreholes were drilled.
He then donated Pfumvudza inputs, including fertilizer and seed, 10 000 chicks to 1 000 vulnerable families, began the second phase of information communication technology laboratories across Matebeleland South, with schools being given computers, extended presidential goat scheme (three goats to each chief; two goats to each headman and a goat to each village head).
Everyone who came to the rally was also given garden seed pack, including tomato, cabbage, rape, and onion.
Zanu-PF has brazenly resorted to its traditional vote-buying tactics ahead of the next elections with the recent move being the pampering of traditional chiefs with all-terrain vehicles in a development that sets on course rigging mechanisms of the elections.
All this is fuelling inflation.
Zimbabwe's annual consumer price inflation skyrocketed to 175.8% in June 2023, up from 86.5% in the prior month, marking a continued deviation from the downward trend observed since the beginning of the year.
It was the highest reading since January 2021, stoked by a sharp depreciation in the Zimbabwe dollar, which crashed 50% since the start of June in the official market.
The official exchange rate is US$1: ZW$5 739, while the parallel rate is US$1: ZW$8 400. Analysts say the local currency has depreciated 97.62% since 1 January 2022.
On a monthly basis, consumer prices jumped by a record 74.5% in June after a 15.7% rise in the previous month.
On top of this, the government will spend US$116 million on the general elections.
In his spending spree, Mnangagwa has handed over new cars to 38 newly-installed chiefs during an annual chiefs' conference held in Bulawayo recently. Also recently, the ruling party unveiled ambulances emblazoned with big facial pictures of Mnangagwa, which it claimed were donated by Zanu-PF supporters. This, again, was seen as vote-buying.
Zanu-PF officials have also been on the campaign trail, dolling out more goodies and cash ahead of the party's primary elections.
There has also been distribution of chickens, fertilizers and drilling of boreholes by Zanu-PF functionaries on the campaign trail.
The government has also been distributing inputs and food in rural areas in a partisan manner, mainly focusing on the ruling party supporters.
Mnangagwa is battling it out against 10 other presidential election candidates — with main opposition CCC leader Nelson Chamisa and former Zanu-PF political commissar, MP and minister Saviour Kasukuwere being his two main opponents.
The Reserve Bank of Zimbabwe on 6 June raised its key lending rate by 10 percentage points to 150% in a bid to tame inflation and protect the country's weakening currency.
It also announced that the central bank will begin selling foreign currency at market-determined exchange rates through banks, but stopped short of allowing the Zimbabwe dollar to float freely.
However, independent economists estimate Zimbabwe's inflation is now around 1 298% annually.
Ahead of crucial general elections in August, Zimbabwe is currently experiencing a devastating third hyperinflation in 15 years, which means hyperinflation every five years.
Zimbabwe has been reeling from serious economic problems for over 20 years now. No country can restore and retain macroeconomic stability, let alone growth, under these conditions.
American applied economics professor Steve Hanke said: "On June 22, I measured Zimbabwe's inflation at 1 298%/year, ZimStat's official (read phony) inflation of (175.8% for June up from 86.5% for May). Zimbabwe is experiencing its third hyperinflation in 15 years."
Additionally, the government spent about US$100 million on underpaid civil servants' bonuses to be processed in two batches, one for the lower grades and the other for higher echelons. This came as the wage bill is shooting up again.
Finance minister Mthuli Ncube had set aside ZW$2.2 trillion for employment costs, inclusive of grant-aided institutions and pensioners, medical aid and pension contributions.
This amount includes ZW$659.4 billion and ZW$336.5 billion for salaries and allowances, for education and health sectors respectively. The share of employment costs to total expenditure is projected at 52.4% in 2023, a huge increase from US$42.3 million in 2023.
The total bill for civil servants' bonuses was US$100 million at an average of US$350 for
300 000 workers. That meant US$105 million.
Mnangagwa offered a surprise US$200 top-up for bonuses for all civil servants.
The 2023 national budget set aside resources to cover voter registration, ZW$12 billion, voter inspection ZW$11 billion and actual election conduct ZW$53 billion, among other expenses.
In a bid to appease war veterans, who always play a crucial role in Zanu-PF election campaigns, the government set aside ZW$4.6 billion to invest in farms, mining and tourism.
War veterans have over the years been demanding gratuities for their role in the liberation struggle.
In 1997, the government paid out unbudgeted lump sums of nearly ZW$50 000 (US$4 300 at the time) to war veterans following months of protests. This led to the collapse of the local currency which has never fully recovered.
In May 2022, the government announced plans to pay one-off rewards and monthly pensions to a new batch of 160 000 war veterans, war collaborators and ex-political prisoners who missed out during the first round of compensation in 1997.
Despite sometimes complaining of being neglected, war veterans have often played a crucial role in elections.
They have always been used by Zanu-PF as part of the commissariat, especially in rural areas where they have been involved in campaigns.
On many occasions, war veterans have been implicated in the intimidation and harassment of opposition members, especially during the election period.
They led farm invasions during the land reform programme, targeting white farmers, some of whom were killed.
Elections have brought huge spending and are driving inflationary pressures.
Source - newshawks
