An economic analyst has said that raising wages and salaries for public sector workers will seriously hurt Zimbabwe’s economy.
John Robertson told Business Times on Friday that increasing the wage bill by 100 per cent, as the government intends to do, will force Finance Minister Mthuli Ncube to propose a huge supplementary budget. Said Robertson:
This [increase in wages] will be beyond what has been provided in the budget for 2020.
This might mean that Finance and Economic Development Minister Mthuli Ncube will be forced to propose a huge supplementary budget halfway through the year.
High government expenditure might also force the government to increase taxes to fund the huge bill.
Apart from that, the exchange rate on the black market might go up because of this as well as prices of goods and services spurring inflation.
Earlier this month, the government offered its employees a 97 per cent wage hike to cushion them against runaway inflation.
However, the civil servants rejected the offer, insisting on being paid the equivalent of their pre-October 2018 US dollar-denominated salaries at the current interbank rate.