Bonus, Imports Leave Treasury In The Red
LIVINGSTONE MARUFU
Fiscal pressure to pay annual bonus to civil servants and the importation of grain and power has left Treasury in the red despite running budget surpluses in the period January to August, Finance minister Mthuli Ncube has said.
The economy is reeling from foreign currency and fuel shortages, crippling power outages which have affected operations in industries. Ncube told Business Times on the side lines of Zimbabwe National Chamber of Commerce conference that the implementation of fiscal consolidation reforms saw consistent monthly budget surpluses reaching ZWL$1.4bn in the period January to August 2019.
“I can tell you that from January to August we were running on a monthly surplus on a cash basis of over ZWL$100m but beyond September with bonuses and pressure on the importation of grain and power that’s where the big deficit kicked in but we will end the year on a good wicket,” Ncube said.
Government reviewed the tax-free bonus threshold to ZWL$5,000 from ZWL$ 1, 000 with effect from November with civil servants also expected to get their full annual bonuses pegged on gross income.
Treasury gave the bonuses to civil servants to ensure a decent standard of living for public servants during the festive season, and took inflationary developments into account in the ongoing wage negotiations. Ncube also said an upward adjustment in the tax threshold for low income earners to ZWL$2, 000 from ZWL$700 in order to improve disposable incomes.
However, this came with a huge price as the country created a supplementary budget ZWL$10.85bn which ate into the surpluses and other money which was not budgeted for.
Economist Persistence Gwanyanya said the government departments did not understand the austerity measures properly as they did not pay some debts all in the name of austerity.
“Government knew well that civil servants were on their toes since January and would have budgeted that money for the on the right time rather than to start explaining to people that it was now spending unbudgeted money,” Gwanyanya said.
