The Sunday News
Finance and Economic Development Minister Patrick Chinamasa has crafted a $933 million Supplementary National Budget to stimulate economic recovery, while a freeze on civil service salaries and job recruitments will be maintained to limit Government expenditure.
The package awaits Cabinet approval.
Minister Chinamasa last year presented a US$4, 2 billion budget in which he said policy consistency, credibility, certainty and transparency were critical blocks for confidence-building in the economy.
In a Staff-Monitored Programme Letter of Intent and Technical Memorandum of Understanding, jointly signed by Minister Chinamasa and Reserve Bank Governor Dr John Mangudya, it was noted that given constrained financial space stemming from large maturities on Treasury Bills and loans in 2014, the US$933 million package would deal with some of the challenges hampering economic growth.
The money is expected to be largely raised from customs revenue and taxes.
“Given the downward revision to the economic outlook for 2014, there are significant risks to the revenue side of the budget. In addition, our financing space is quite constrained, as we are facing large maturities on domestic Treasury Bills and loans in 2014.
“To address these challenges, the Minister of Finance and Economic Development presented a package of additional revenue and expenditure measures to Cabinet in early-June 2014. The package amounts to about US$933 million (6,9 percent of GDP) and places a heavier weight on revenue measures, including US$554 million (4,1 percent of GDP) from selective increases in customs duties, targeted tax compliance operations, non-tax revenues mobilised largely by redirecting surplus resources in several extra-budgetary funds, and from measures to address custom revenue leakages,” reads part of the letter.
Minister Chinamasa said Government would not review civil servant salaries this year so as to keep the wage bill down.
After a salary review this year, the wage bill increased by 14 percent, far exceeding projected inflation.
The least-paid Government employee is earning US$375 while nurses and teachers get about US$500 per month.
“However, we remain committed to our objective of keeping the overall wage bill on a downward trend relative to Government revenues and expenditures in the medium term, while preserving the real value of salaries of the civil service,” reads another portion of the letter.
“Like we did in 2013, we commit to granting only one salary adjustment in Zimbabwe. The 2014 Budget provided for an eight percent increase to the overall wage bill.
“Following the conclusion of negotiations in the National Joint Negotiating Council in January 2014, the overall wage bill is now projected to increase by 14 percent this year.
“The larger increase resulted from the need to make good on the Government’s election commitments. We have already identified cuts in non-wage non-interest spending, relative to the 2014 National Budget Statement, in order to completely offset these wage increases.
“The wage increase significantly exceeds projected inflation for 2014.”
