President Emmerson Mnangagwa’s government has been forced to bite the bullet and take recurrent expenditure head on by cutting the wage bill while growing revenue collections to deal with fiscal imbalances, Business Times has learnt.
For years, Government has been flirting with cutting the wage bill, which gobbled in excess of 97 percent of the cash budget at some point, to sustainable levels by retrenching workers and cleaning up the civil workforce inflated by thousands of ghost workers.
Now, a plan is in motion to implement staff rationalisation and general expenditure cutting initiatives while growing taxes.
Deputy Chief Secretary for Presidential Communications George Charamba said Government had already trimmed Cabinet with plans for further similar action across the board to the lowest civil servant.
In the two-year Transitional Stabilisation Programme, Government hopes to reduce the public sector wage bill to 50 percent of fiscal revenue by 2020. Wage bill rationalisation measures should realise financial savings of $200 million and $130 million by end 2019 and 2020 respectively. Some of the measures to achieve this include; rightsizing the public service through adoption of lean structures and enforcing the retirement policy.
Charamba said there are two ways of balancing the budget, restraining public spending and enhance efficiency towards collection to drift towards a surplus at a time the economy is suffering from leakages.
In line with the strategic focus, President Mnangagwa in June appointed Vincent Hungwe to chair the Civil Service Commission, a critical role in the exercise. This has been described as getting new brooms, with no emotional attachment for the job.
“So far we have trimmed Cabinet and attacked the echelon of PS [permanent secretaries]. It’s a shock therapy to a civil service used to being in office and feeling entitled,” Charamba said.
Permanent secretaries were laid off on the grounds of old age although some had been accused of various malpractices.
“It was on the grounds of age or offences in the past, some haven’t been deployed and chances are some will be offloaded,” he said.
This, Charamba said, sends a clear signal of intent to slim the wage bill at the second highest level after Minister.
“We go down further targeting not just positions, but also departmental rationalisation because there is too much duplication and overlaps in government, he added.
So far President Mnangagwa’s administration has combined roles under Perrance Shiri’s Lands, Agriculture, Water, Climate and Rural Resettlement ministry as an attempt to reduce duplication.
“The disarticulation of departments which should work together was an excuse for hiding excess labour. We also had functions that overlap without introducing any efficiency,” Charamba said.
The risk however remains that Government can move from one extreme of ballooning and unsustainable wage costs to another where it trims the staff to a point that affects service delivery.
As a result, Government has had to balance the two by increasing revenue collections in order to reduce the budget deficit and back essential services.
To increase revenues, government introduced a 2 percent transaction cost and is now in the process of restructuring parastatals through selling off, finding equity partners and commercialising the entities.
“The public sector which used to contribute 40 percent to economy will be trimmer and efficient, with all non-core assets being hived off,” Charamba said, adding that former Finance secretary Willard Manungo was strategically placed as head of State Enterprise Reform and Corporate Governance Unit at permanent secretary level.
“Others think (Manungo’s appointment) is downgrading, but it’s actually a key pillar. That’s why we have a banker running the fiscus while an ex PS of Finance deals with the deficit via parastatal reform. There is synchronicity,” Charamba said.