HARARE: Finance minister Patrick Chinamasa’s suspension of civil servants’ bonuses was a bold decision which signalled Zimbabwe’s commitment to implement reforms under the International Monetary Fund’s Staff-Monitored Programme (SMP).
For a long time, government was accused of operating in a vacuum by paying bonuses at a time the private sector had suspended the gratuities citing the prevailing harsh economic environment. But Chinamasa’s drastic move was superseded by President Robert Mugabe attacking the Treasury move, and restored bonuses to civil servants saying it had become more of a right after an outcry by trade unions and civil servants.
The country’s economy is encumbered with low aggregate demand with more companies closing shop and high unemployment levels. Vending has become the order of the day with 5,7 million people in the informal sector.
Therefore, the move by Treasury at least showed that government had seen the light that the economy was not doing well with the tax collector Zimbabwe Revenue Authority (Zimra) struggling to get levies. Zimra is owed over $1 billion in unpaid taxes and has been garnishing company accounts, something that has not been done in this economy in the past.
Even though Chinamasa has recanted saying it was a “procedural mistake” in the face of a barrage of criticism from Mugabe in the hope of keeping his ministerial job, it is ironic that government is still to complete payment of 2014 bonuses. If Treasury is struggling to raise the $260 million monthly salary bill for civil servants, where would they get the bonus money from? The government owes $13, 4 million to State university staff for outstanding 2014 bonuses.
IMF advised Zimbabwe to reduce the number of civil servants who have been consuming over 70% of recurrent expenditure through salaries. This means there is little for capital expenditure in areas such as infrastructural development. So suspending bonuses was a commendable development as it showed that government was trying to live within its means.
Yet, Mugabe thinks otherwise. Where will Chinamasa get the money to pay the bonuses from? An SMP is an informal agreement between a government and IMF staff to monitor the implementation of a particular country’s economic reforms. It does not entail resumption of funding from the multilateral finance institution. What must be taken note of is the fact that when the IMF visited the country last year they concluded that Zimbabwe had made strides in implementing the SMP. We however wonder what conclusions they would make when they visit in September.
Zimbabwe has a bloated 500 000 civil service. Bleeding the fiscus is the huge numbers of ghost workers as confirmed by the Comptroller and Auditor General. We have been failing to access credit lines from international financiers due to the debt overhang of $10 billion. Besides, Zimbabwe is facing a credit crunch while the financial services sector has taken a cautious approach to lending due to the high non-performing loans.
Mugabe must be reminded that Zimbabwe needs right policies. We cannot pretend that the President does not know the implications of his populism on the country’s economy. He simply needs to know that populism belongs to the Stone Age. He must not be the one to erode the gains made by Chinamasa on this critical matter. In fact he must not only seek to entrench his stranglehold on power at the expense of our beloved Zimbabwe.
