Govt pursues measures to cut wage bill Minister Chinamasa
Minister Chinamasa

Minister Chinamasa

The Ministry of Finance and Economic Development has said it is pursuing various measures to reduce the wage bill and lower it as a share to the gross domestic product in 2015.Some of these measures include a civil service restructuring exercise and decentralisation and modernisation of the Salary Service Bureau.

In a Letter of Intent to the International Monetary Fund, which describes the policies that Zimbabwe intends to implement in the context of its request for financial support from the fund, Finance Minister Patrick Chinamasa is seeking for the approval of the completion of the first review under the 15-month Staff Monitored Programme and the modification of quantitative targets for 2015.

“We have met all end-December 2014 quantitative targets. In particular, we lowered the fiscal deficit and managed to improve the external position, which remains problematic.

“We also met all structural benchmarks for the first review: Cabinet has approved the Public Debt Management Bill and the Board of the Zimbabwe Asset Management Corporation (Pvt) Limited (ZAMCO) has approved its mandate, strategy, and specific objectives.

“In addition, we have made substantial progress in the area of public financial management, financial sector reform, and improving transparency and governance,” said Minister Chinamasa.

He, however, added that the macroeconomic environment remains difficult.

Slower growth, low productivity in the manufacturing sector, weak domestic demand, lower commodity prices and the appreciation of the dollar continue to weigh on the economy.

In light of the need to cut down expenditure, Minister Chinamasa said measures to reduce the wage bill will be presented to Cabinet.

He said the Civil Service Commission (CSC) has been working on streamlining public sector employment by conducting a restructuring exercise to align ministries’ staffing with their mandates, to identify duplication and redundancies.

Government employment costs in the two months to February amounted to $465,76 million, mainly weighed on by 2014 bonus payments.

Last year, the total employment costs amounted to $2,1 billion, which is about 51 percent of the total revenue of $4,12 billion. The civil service has a total staff compliment of 226 000, including members of the defence forces.

Excluding the defence forces, the civil service total stands at 186 000, with the Ministry of Primary and Secondary Education accounting for 128 000 of the staff.

The Ministry of Health and Child Care has the second highest number of workers with 36 000, Higher and Tertiary Education Science and Technology Development comes in third with 16 000 and Agriculture is fourth with 14 000

The Civil Service Commission chairman Dr Mariyawanda Nzuwa recently said there was rampant duplication of roles in the civil service and said his commission was currently undertaking a head count and will make recommendations to Government.

“It is regrettable but necessary that commission does determine portfolios of Government. Yes, we agree that there is duplication of roles, we are aware of it in particular in the Ministries of Youth, Women and Agriculture, currently we are carrying out a head count and intend to resolve the problem provided political will is there from policy makers,” Dr Nzuwa said.

Minister Chinamasa also said that Government will have completed the decentralisation and modernisation of the Salary Service Bureau, which would place a payroll assistant in every district, strengthening control over the wage bill and minimising irregularities.

“At the same time, we will develop a medium-term strategy to bring the wage bill to a level that would create sufficient room for development spending.

“We remain committed to reducing domestic arrears and improving service delivery.”

In order to strengthen revenue collection, Government stepped up efforts by increasing the excise duties on fuel, cigarettes and beer and the levy on tobacco growers.

“We continue our efforts to collect tax arrears and have also started working on strengthening revenue administration in collaboration with our international partners.

“Specifically, the World Bank has been supporting our efforts in developing skills in VAT management and addressing transfer pricing issues.

“The Fund, through AFRITAC South, has been assisting us in strengthening risk management processes, focusing on risk mitigation techniques.”

Minister Chinamasa said the treasury has also been working on improving registration, filing and payment compliance, with a special focus on the informal sector.

“Going forward, we plan to:

(i) Develop an incentive system for small and medium businesses, so that they continue operating in the formal sector; (ii) Strengthen the mechanism for monitoring and evaluating the tax expenditure regime; and (iii) Enhance the revenue forecasting capacity of the ZIMRA and the MoFED.

“We plan to request technical assistance in these areas.”

“The intention is to bring the central government primary account close to balance in 2015, despite the tight economic conditions.

“We are planning to offset revenue shortfall, if any, through cuts in lower priority current and capital spending.

“Nevertheless, we will continue to protect priority social spending.”

Other measures that Government will pursue include amendments to the Public Finance Management Act to strengthen Treasury oversight of public enterprises and local authorities.

Principles for the proposed amendments were approved by the Cabinet in March.

Government has also identified 10 state-owned enterprises that, after restructuring, will play a more important role in the implementation of Zim-Asset. — Wires.

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