…as Govt moves to cut wage bill by $330 million
Tinashe Makichi
Government expects to save $330 million by 2020 through wage bill containment measures that will result in the right sizing of public employment among a raft of reforms to rein in runaway expenditure.
According to the Transitional Stabilisation Programme which runs from October to December 2020, the 2019 National Budget will institute measures that will reduce the annual wage bill outlay by around $200 million (0,7 percent of GDP). The 2020 National Budget will come out with measures that will further reduce the wage bill by $130 million (0,3 percent of GDP).
The wage bill containment measures include rationalisation of some posts in the public service, right sizing of public employment, reduction in budget travel expenditures and rationalisation of foreign service missions, according to the plan unveiled by Finance minister Mthuli Ncube in Harare today.
Other measures include limiting expenditures of by-elections and moving away from an unfunded “Pay as you Go’ pension payment arrangement by adopting a funded defined benefit pension scheme or defined contribution scheme arrangement in line with best practice in other jurisdictions, among others.
“The 2019 and 2020 National Budget will institute wage containment measures which will reduce the annual budget outlay by around $200 million and $130 million respectively. We are looking at right sizing public employment and rationalisation of posts in the public service. The programme recognises the need to reform the Civil Service, that way beginning to make inroads towards managing the wage bill, which currently constitutes a disproportionate share of government expenditure.
“To this end, the Civil Service will be recalibrated to propel the country to greater heights of prosperity for all citizens. Expenditure management measures to address fiscal imbalances and ensure the National Budget anchors Zimbabwe’s developmental agenda are integral to the Transitional Stabilisation Programme over 2018-2020,” Ncube said.
He said the expenditure framework for 2019 and 2020 was premised on fiscal re-balancing and consolidation efforts which will anchor recovery of business and investment, also against the background of anticipated positive returns from re-engagement with the international community.
In this regard, stricter tracking of fiscal anchors, as outlined in the 2018 Budget, will be central to economic transformation and job creation.
Ncube said public financial management systems required reinforcement to improve effective utilisation of public resources and improve on accountability. 238.
During the period to 2020, the Transitional Stabilisation Programme will prioritise strengthening of the Public Finance Management System, building on work already being conducted, under the World Bank managed Zimbabwe Reconstruction Fund, to roll out the system to cover all districts.
In furtherance to the fiscal stance alluded to in the 2018 Budget, the Transitional Stabilisation Programme targets strengthening fiscal responsibility over control and management of expenditures.
“This entails working with cooperating partners for development of external financial support options over the coming twenty-four months, January 2019 – December 2020.
“The fiscal targets will relate to a Budget framework that agrees to gradual Quarterly reduction with reporting dates for end March 2019, June 2019, September 2019; December 2019 and 2020 for the following, overall fiscal deficit targets, Central Government overdraft position at the Reserve Bank, Domestic public debt to GDP, Government wage bill as a proportion of total Budget expenditures, Treasury Bill issuances, Central Government contingent liabilities and guarantees,” Ncube said.
The economic plan will focus on mobilisation of deposits through promotion of a culture of savings and investment, to engender the role of the banking sector in financial intermediation, particularly in “supporting productive and export sectors to at least 90 percent of banking sector lending”.
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