By Tatenda Dewa | Harare Bureau |
Government faces further protests by civil servants after announcing on Thursday that it was suspending annual bonuses and cutting salaries to reduce public service expenditure.
Patrick Chinamasa, the Finance and Economic Development minister, made the announcement in his mid-term fiscal policy review statement in parliament.
Chinamasa noted that public expenditure continued to outstrip revenue production, with employment costs accounting for some $1,638 billion of revenue between January and June this year.
The figure translates to 96,8 percent of total revenues, meaning that government is generating little money.
“Against expenditure pressures, implementation of the 2016 National Budget inevitably requires further fiscal reforms in order to rebalance expenditures with anticipated revenues, including rationalising public expenditures, as well as the reduction of employment costs in favour of capital and social spending,” Chinamasa said.
He said there would be no bonuses for civil servants in 2016 and 2017 while government would reduce salaries and allowances by 5 percent and 20 percent, starting with deputy directors to ministers from October.
“The proposals will translate to savings of around $180 million per annum, which will be channelled to essential expenditures relating to the drought,” said Chinamasa.
Starting October, government will tax civil servants allowances using a progressive tax structure after consulting with relevant departments.
Already, government is carrying out a civil service restructuring exercise which includes taking 25,000 public employees off the payroll.
It is planning to reduce the number of foreign embassies and consulates, which are reported to be in deep debt, review class travel arrangements for all officials and cut down on their allowances.
The measures are expected to reduce employment costs to around 60 percent of total revenues by 2019 from the current 97 percent and ultimately redirect revenue towards capital expenditure which will stimulate production. Nehanda Radio