Govt refuses to retrench

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ZIMBABWE is not prepared to slash its public sector wage bill to meet debt-reduction plans agreed with the International Monetary Fund (IMF) because it will involve too many job cuts, Finance minister Patrick Chinamasa said yesterday.

ZIMBABWE is not prepared to slash its public sector wage bill to meet debt-reduction plans agreed with the International Monetary Fund (IMF) because it will involve too many job cuts, Finance minister Patrick Chinamasa said yesterday.

The IMF in January approved a six-month extension of a monitoring programme for Zimbabwe aimed at helping it to clear $10 billion in external debts and give it access to much-needed new international credit.

Part of the deal included cutting Zimbabwe’s wage bill from 70% of the budget, but this pledge will not be met, Chinamasa has told the IMF. Economists recommend Zimbabwe bring spending on State wages to below 40% of its total budget.

“Addressing it overnight would mean very drastic measures which I indicated to them I am not prepared to take. That would mean retrenchment of civil servants,” Chinamasa said.

Zimbabwe, which is emerging from a decade of economic decline and hyperinflation, began the IMF-led staff-monitored programme in June.

Cutting wages would allow Harare to free money to develop its failing infrastructure, including roads and power-generating plants, as well as social services like health and education.

The IMF will reopen an office in Zimbabwe this year, 10 years after it left. It did not immediately respond for comment.

Zimbabwe also agreed to strengthen corporate governance in banks, increase transparency in diamond mining and sales and amend its mining laws to encourage investment.

President Robert Mugabe’s government is still behind the IMF plan, but it will wait until its $11 billion economy grows and revenues increase before cutting salaries, Chinamasa added.

The minister said last weekend that the government would pay workers their March salaries today, two days after the money was due. He did not give a reason for the delay and he declined on yesterday to say if the money was available.

Delays in paying salaries raises questions over the state of government finances. Latest data shows the government in January missed its $278 million revenue target by $12 million.

The staff-monitoring programme is a major step for Zimbabwe in normalising ties with the IMF, which in 2003 suspended Harare’s right to vote on IMF resolutions — a step towards expulsion from IMF membership — over policy differences with Mugabe and non-payment of arrears.

Zimbabwe’s economy is struggling due to a lack of investment and closure of companies which complain of high wage and other costs as well as shortages of water and electricity.

Chinamasa had a meeting with China Power Investment Corp yesterday in an effort to persuade the Chinese company to build a 1 200 megawatts thermal power station at a cost of $2,2 billion.

— Reuters