Government’s wage bill is seen growing by 16% this year to $3,7 billion, rising to $3,9 billion next year and pushing the budget deficit to nearly 14% of the gross domestic product (GDP), government projections show.
Zimbabwe already spends 80% of its budget on salaries for government workers, who received a raise of 17,5% from July, adding a further $500 million to the wage bill this year, from an original projection of $3,2 billion.
“While we had estimated employment costs for 2018 at around $3,2 billion, the projected out-turn indicates a total expenditure of employment cost of $3,7 billion. We expect gradual increases in 2019 to about $3,9 billion. The budget deficit out-turn is expected at 11,1%, a double digit budget deficit is not sustainable,” Finance permanent secretary George Guvamatanga told the Parliamentary Portfolio Committee on Budget, Finance and Economic Development concerning the bids and priorities for the 2019 National Budget in Harare on Monday.
“I think there are economic models that have clearly indicated that the moment you start to run to the 14% or 15% as your budget deficit, you start to invite hyperinflation into the economy. That is why the budget framework for 2019 looks at fiscal consolidation, expanding the revenues collection, but with a much more tighter expenditure control.”
Government expects to cut the 2019 wage bill by $200 million, which is seen lowering the budget deficit.
“But it is important to also highlight that two weeks ago, we did rebase our economy,” Guvamatanga said.
The Parliament Budget Office (PBO) said in a report released in September this year that the budget deficit could reach a “record-breaking” $3 billion due to rising employment costs and that it expects the deficit at 11,6% of GDP.
Since the country dollarised in 2009, public expenditures have remained skewed towards recurrent spending.
The Budget, Finance and Economic Development parliamentary committee chairperson Francis Mona said the budget deficit was quite unacceptable.
“The numbers you and the minister (Finance minister Mthuli Ncube) presented, are you going to manage that culture of overspending without seeking condonation from Parliament? Because, you have seen that the budget deficit you talked of, which is quite unacceptable, and yet the ministry has never approached Parliament,” he said.
“So, I am saying concerning the three arms of the State, is it the other arm becoming bigger than the other arm? I wonder how you are going to address this issue given the culture of overspending.”
The committee concluded that starting next year, Treasury would have to make quarterly reports to the committee and seek approval for any additional expenditure not budgeted.
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