Home / Business / Chinamasa warns on salary hikes

Chinamasa warns on salary hikes


Chinamasa, who was speaking on Friday at the Women’s Conversation on Legislation with HE President Emmerson Mnangagwa in Harare last week, said the increases could make the wage bill grow from 90% of government revenue to 120%.

“Another problem causing cash shortages is the fact that we have a huge fiscal deficit. If there are any civil servants here, I want them to hear this clearly. Of every $100 that we receive, 90% is going to wages. And this situation is going to be made worse by the recent salary or allowances adjustments with the nurses, doctors and teachers and the rest of the civil service. I may not be surprised to find out that will be not 90%, but 120%,” he said.

Already, the wage bill is on course to chew

$4,5 billion of the $5,07 billion in government revenue expected for the year.

At 120%, the government would need about $6,08 billion to cater for the wage bill alone before it can fund other projects, leaving it in a serious fiscal deficit.

This comes as a potential effect of government tabling a 15% salary increment for civil servants amid calls for an upward review on salaries by labour unions.

Faced with the possible huge fiscal deficit, Chinamasa said it would be impossible for the country to make physical cash available.

In the absence of cash, Chinamasa envisages to increase point-of-sale machines from 75 000, to between 120 000 and 150 000.

“Now, what that means is for everyone receiving wages from government. The expectation is that it should be physical cash. That is not the case. We cannot match what we used to pay every month, something like $300 million, which we pay wages. We cannot match that in physical cash. If we do, we run the risk of hyperinflation, going back to 2008 (situation) and government is not prepared to go that route,” he said.

In his 2018 National Budget last December, Chinamasa warned that the room for domestic financing of the large fiscal deficit had now been fully depleted and that additional monetary financing of the deficit can only lead to inflation and further economic deterioration.

The government is financing its activities mainly through the issuance of Treasury Bills and real time gross settlement balances, which are already aggravating the fiscal deficit.

According to the Treasury boss, this year will see a budget deficit of $672 million and with elections nearing, the country’s expenditure is expected to balloon further.

The country gets hard currency mainly from export earnings, Diaspora remittances and foreign direct investments, which are not sufficient for the market.

“We are not getting as much foreign investments as we should. Indications are that this is going to improve as we go into the future, but currently, that is not so. We are not getting lines of credit,” Chinamasa said.

He said the recent commitment of $100 million from the United Kingdom, through Standard Chartered Bank, was a welcome development, as the government had not received any credit from Europe for the past 20 years.

Source :


Check Also

Zimbabwe: Water Shortages Hamper Bulawayo’s Coronavirus Fight

The Bulawayo City Council’s (BCC) capacity to curb the spread of the coronavirus is being …