Chinamasa, Mugabe bonus flip-flop

By Ndakaziva Majaka

Seventeen months ago — on April 13, 2015 to be precise — Finance minister Patrick Chinamasa held a game-changing press conference in Harare in which he announced that government had suspended civil servants’ bonuses for two years.

The Treasury chief, accompanied by then-Information minister Jonathan Moyo and President Robert Mugabe’s spokesperson George Charamba, argued that cancellation of the 13th cheque was part of moves to meet the International Monetary Fund (IMF)’s demands under the Staff Monitored Programme (SMP).

However, barely a week later, Chinamasa’s boss, Mugabe, undressed him by publicly reversing and dismissing his pronouncement.

In his typically populist approach, Mugabe declared before a gathering at the 35th Independence celebrations that civil servants would be paid their bonuses.

The nonagenarian leader said Chinamasa’s bonus suspension announcement was so “disgusting” and went further to claim that he was not even consulted nor was the Cabinet and his two Vice-Presidents engaged for approval.

“I want to make it clear that the report which was in the newspapers that bonuses were being withdrawn is not government policy,” Mugabe said.

“The Cabinet did not approve that at all and the presidency was never consulted on the matter. We were never consulted the three of us, that is myself and the two vice presidents and we say that is disgusting to us and it will never be implemented at all,” Mugabe said then.

Fast forward to September 8, 2016, Chinamasa makes the same announcement in his Mid-Term Fiscal Review for the year.

He suspended civil servants’ bonuses for two years — 2016 and 2017.

The Finance minister said the move — on the back of government failing to pay civil servants salaries and 2015 bonuses — was part of a raft of rationalisation measures — approved by Cabinet — to reform civil service and reduce civil service wage by $180 million.

Even after the bonus suspensions, he said “the monthly wage bill will still remain high at $245 million, which is 76 percent of revenue”, adding that government was going to shed 25 000 jobs in the civil service — culminating to annual savings of $155 million by the end of 2017.

While analysts said Chinamasa’s long overdue move to cut government expenditure and spend within its means by suspending bonuses and trimming the bloated civil service, they expressed concern over the high likelihood that populist Mugabe will overturn the sound reforms.

“In my view, Mugabe will reverse the cuts and announce bonuses,” Harare-based analyst, Issis Mwale, said, adding that “it will not be the first time something like that happens… mind you, there is so much infighting within Zanu PF and elections are coming up”.

“Do you honestly think the president will stand by Chinamasa and back reforms that can potentially cut his support base?” she questioned.

“The man (Chinamasa) is in a catch 22 situation because on one hand he is trying everything within his power to have the country re-engage with multi-lateral lenders while on the other he is trying to deal with a boss (Mugabe) obsessed with pleasing his supporters,” Mwale said.

Respected economist, John Robertson, said while Chinamasa’s proposed reforms were “quite sound and unlike Zanu PF” the Treasury chief risked having the humble pie shoved into his mouth by his boss.

“We expected these measures to be announced last year when Chinamsa promised he was going to cut the wage bill by 40 percent. But after the bonus humiliation I am sure he could not bring himself to announce them,” he said.

“But this year, he bravely sneaked them into his statement. But then, Chinamasa is not the problem, neither is he in control. We all know the president, if cornered, will rubbish all this, history has shown us that this is very possible,” Robertson said.

Chinamasa’s remarks come as government’s coffers have significantly depleted due to low revenue inflows on the back of a depressed economy.

In his latest fiscal review, Chinamasa said government was saddled by a $623,2 million budget deficit as of June 30, which he projected to exceed $1 billion by year end.

The country’s 2016 first half revenue collections stood at $1,8 million, 9,8 percent below target, with expenditure standing at $2,3 billion against a target of $2 billion.

“The major component of the high expenditure is the wage bill, which is at the centre of the fiscal deficits and, hence, overall macro-economic instability,” Chinamasa said, before warning that “failure to contain the budget deficit in the shortest possible time will worsen the deficit to an estimated year-end level of over $1 billion”.

Currently, Zimbabwe is desperately trying to secure a bail out package from international lenders.

Last year, at the IMF and World Bank meetings in Lima, Peru, Chinamasa and central bank governor John Mangudya presented the country’s plan to settle its $1,8 billion arrears by May this year, a date later pushed to end of June.

But, the country missed the deadline.

Robertson said “in fact, the only thing standing between this country and international financial support is Mugabe”.

“He (Mugabe) is pathetically populist and in his desperate attempt to cling to power may dampen Chinamasa’s hard work with the re-engagement process,” the forthright economist said. Daily News