Zimbabwe Cabinet shoots down Treasury plans to cut spending

Zimbabwe Cabinet shoots down Treasury plans to cut spending

HARARE, Sept 14 (The Source) – President Robert Mugabe’s government has rejected Treasury plans to reduce spending through job cuts, suspension of bonuses and scrapping a maize subsidy, it announced on Tuesday.

Last Thursday, Finance Minister Patrick Chinamasa said government faced the prospect of defaulting on state employee salaries, which currently gobble up nearly 97 percent of all government revenues. He proposed to cut 25,000 jobs, suspend bonus payments for two years, among a battery of measures.

Other proposed measures would see salary cuts for senior government officials-including ministers, government vehicle entitlements and the payment of market prices for grain. Zimbabwe currently pays $390 for a tonne of the staple maize grain, significantly above regional prices.

Zimbabwe’s economy, which averaged 7 percent growth between 2009 and 2012 under a power-sharing government with the opposition, has flat lined since 2013 when Mugabe regained complete control of government after yet another disputed election. Government has reduced its growth forecast for 2016 from 2.7 percent to 1.2 percent.

Chinamasa said his proposed austerity measures were meant to free up some financial resources to fund productive sectors and infrastructure projects.

However, Information Minister Chris Mushohwe issued a statement late Tuesday, announcing that Cabinet had twice rejected Chinamasa’s proposals.

“For the record, the above proposals were tabled before Cabinet by the Minister of Finance and Economic Development on 12th July 2016 as part of cost-cutting measures to facilitate economic recovery,” Mushohwe said.

“After extensive deliberations, cost-cutting measures relating to the civil service were rejected and the position of Cabinet is that the Minister of Finance and Economic Development did not take into account the rejection by Cabinet earlier on.”

Mushohwe added that Monday’s Cabinet meeting, held days after Chinamasa’s address to parliament, reiterated its opposition to the spending cuts.

This is not the first time Mugabe has reversed Chinamasa’s reform proposals. In April 2015, the finance minister sought to suspend civil servants’ bonus payments for two years, but was slapped down by Mugabe who described the plans as “disgusting.”

It took government six months to pay the 2015 bonuses, culminating in a salary default in June.

Last week, Chinamasa said his proposals would save government at least $355 million over the next two years, a significant amount that’s nearly 10 percent of projected 2016 government revenue.

Mugabe’s government has, over the past three months, faced a series of protests over a growing economic crisis marked by bank note shortages, widespread hunger after another failed farming season as well as job losses and rising poverty.

In July, grassroots protest movements took advantage of a government strike over unpaid salaries to stage the biggest boycott against Mugabe’s rule in a decade.

Government has been struggling to pay its employees, estimated at 500,000 including security forces, on time.