Zimbabwe is set to implement significant civil service sector reforms as the government tries to control a ballooning budget deficit, Finance Minister Patrick Chinamasa has said.
Presenting his 2016 mid-term budget review statement on Thursday, Chinamasa said the country’s budget deficit for the six months ended June 30, 2016 had ballooned to US$623.2m, far above the full-year target of US$150m.
“Failure to contain the budget deficit in the shortest possible time will worsen the deficit to an estimated year-end level of over US$1b,” said Chinamasa, adding that government had financed the deficit by issuing Treasury Bills worth US$726.1m.
Chinamasa said during the period January to June 2016, revenue underperformance against over-expenditures had resulted in the budget deficit.
He said government had reacted to the huge deficit by approving and implementing key wage bill rationalisation measures.
“In this regard, some of the key wage bill rationalisation measures have since been implemented, and are already yielding monthly savings of around US$6.5m, effective 1 January 2016,” said Chinamasa.
He added that as part of the measures, government will reduce salaries and allowances of deputy directors to ministers by between 5-20% effective October 2016.
Chinamasa said government workers will also forego the 2016 and 2017 bonus.
“The proposal will translate to savings of around US$180m per annum, which will be channelled to essential expenditures relating to the drought.
Other measures to be implemented include but are not limited to taxing of civil servants allowances with effect from 1 October 2016,issuance of one condition of service vehicle to deputy ministers and permanent secretaries, rationalisation of foreign travel for all government officials including ministers.
He said government also targets to reduce employment numbers from the current 298 000 to 273 000 by end of 2017.
Zimbabwe’s current civil service wage bill and related benefits constitutes about 96.8% of total revenue, leaving very little for capital expenditures, operational expenses and interest payments.
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