Banks act on civil servants arrears

By Hazel Ndebele

SEVERAL banks have resorted to deducting money owed to them by civil servants directly from their accounts instead of receiving it from the Salary Service Bureau (SSB) after government’s continued failure to remit deductions despite effecting them, the Zimbabwe Independent can reveal.

The cash-strapped government has not remitted money deducted in March and April from civil servants’ salaries to banks owed by government workers through loans despite the deductions reflecting on payslips. The situation means that affected civil servants are now in arrears in respect of payment of debt and other financial obligations, and could find themselves enduring double deductions.

The SSB, which processes government salaries, is supposed to remit money deducted from civil servants for payment of debts from banks, pensions, life policies, funeral covers and policies as well as medical aid subscriptions to the Premier Service Medical Aid Society (Psmas) which mostly comprises government workers.

They may also not be able to get health cover from their medical aid society.

According to sources, government remits an estimated US$36 million monthly deducted from its workers to different institutions.

“We have been holding meetings and going forward plans are to deduct money owed to banks directly from the bank account holder so that the bank is not prejudiced,” said a senior bank executive who spoke anonymously.

Banks say government, increasingly struggling to meet its civil service salary obligations as the economic crisis worsens, had in the past been transferring the money to banks without delay, but delays are now disturbing day to day operations.

Banks are currently saddled with more than US$700 million worth of bad debts.

Sources said the move by banks would put government under increased pressure as it would have to pay salaries in full without any deductions.

“If the majority of banks decide to directly deduct their debts from account holders it would then mean government has to pay salaries in full and at once,” the source said.

An account holder at Peoples Own Savings Bank (POSB) who spoke to the Independent this week said her bank last week advised her that her monthly loan repayment would be deducted directly from her salary by the bank.

Finance minister Patrick Chinamasa a fortnight ago confirmed government’s increasing failure to pass on deductions under the stop order system to various creditors of civil servants after coming under fire from President Robert Mugabe for announcing civil servants’ annual bonuses had been suspended.

“We were bound to make the mistake given the budgetary pressures weighing heavily on the shoulders of Treasury. Primarily the challenges we are facing in meeting the 2014 bonus commitments, the challenges to do with payment of pensions and wages for our foreign missions,” Chinamasa said.

“The challenges to do with our failure to remit contributions to Premier Service Medical Aid Society for the good health of the bulk of civil servants as well as the challenge in meeting the debt repayment commitments we have made to our creditors.” Zimbabwe Independent