IMF warns Zimbabwe that overspending by Govt could worsen cash crisis & fuel inflation

In a statement at the end of a 12-day visit to Zimbabwe, International Monetary Fund (IMF) team leader Ana Lucia Coronel said Zimbabwe’s economy could be worsened by overspending by Government will worsen the cash crisis and fuel inflation.

Said Coronel:

Excessive government spending, if continued, could exacerbate the cash scarcity, further jeopardize the health of the external and financial sectors, and, ultimately, fuel inflation. Spending pressures stem from high employment costs, government transfers to support specific economic sectors, and elevated discretionary expenditure. Action on these three fronts, while safeguarding social outlays, is therefore crucial. Reducing the wage bill could involve reviewing allowances and benefits and evaluating the size of the civil service with a view to eliminating non-essential posts.

Zimbabwe’s wage bill uses more than 90 percent of government revenue with efforts by Finance Minister Patrick Chinamasa to reduce it facing stiff resistance from government including President Robert Mugabe.

More: Insider Zim

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