“Civil Servants’ Salaries Should Be Raised Sustainably”, IMF

The International Monetary Fund (IMF) said that state workers’ salaries should be raised but this should be done sustainably.

IMF’s resident representative to Zimbabwe, Patrick Imam noted that the government’s wage bill increased significantly between 2010 and 2016.

The unsustainable increase of the wage bill more than doubled from about 40 per cent to nearly 90 per cent of tax revenue. Said, Imam:

But unlike in other countries, the issue in Zimbabwe was not the public employment level, which was in line with peers, but rather the public sector wage premium, which was significantly above peers.

Imam said that civil servants’ salaries should increase going forward, and this should not be done through printing money. He added:

… going forward, civil servant wages will have to increase, as the Government already announced in its supplementary budget.

However, it must be financed sustainably. In the past years, wage increases were financed by printing money, which in the end was self-defeating as it eroded the purchasing power of the wage increase.

It is, therefore, important that wage increases be aligned with growth in tax revenues to ensure it does not create an unsustainable burden on the budget.

Meanwhile, reports indicate that the government will soon issue new notes and coins to replace the surrogate currency (bond note) that was introduced in 2016.

Minister of Finance, Mthuli Ncube told Bloomberg that the Zimbabwe dollar notes will trade at parity to the bond notes.

More: Chronicle

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