Government will shed excess civil servants under an ongoing rationalisation programme while recruitment and salaries will remain frozen until at least 2019.
Finance Minister Patrick Chinamasa, in a letter of intent to IMF managing director Ms Christine Lagarde, said this was part of implementing recommendations contained Government’s employment audit.
The April 14 letter, posted on the IMF website and co-singed by Reserve Bank of Zimbabwe Governor Dr John Mangudya, said Government was working on a strategy to lower its wage bill and that of grant-aided institutions to 50 percent of total expenditure by 2019.
“The service commissions of Government will implement the recommendations of their employment audits. We will conduct a review of allowances to identify savings and efficiency gains. We will enhance service delivery by redeploying under-utilised employees and we intend to retrench staff that cannot be redeployed,” reads part of the letter.
“To achieve this reduction, we will work on the size and remuneration of the public service. Based on current economic growth and expenditure forecasts, this will mean that the employment and salary freeze will have to remain in place for at least the next three years,” said Minister Chinamasa and Dr Mangudya.
The letter said additional audits were underway in the Police, Judicial Service Commission and Health Services Board.
“We have already reduced employment cost obligations for grant-aided institutions. Further, to the audit by the Civil Service Commission, the Police and the Judicial Service Commissions and the Health Services Board will complete salary and employment audits for their own sectors in 2016. These audits will inform our decision on the reduction of employment costs across the Government and related institutions.”
Both Minister Chinamasa and Dr Mangudya could not be reached for comment yesterday.
The letter said employment costs in some State-owned enterprises (SOEs) had already been reduced.
“Furthermore, forensic audits were conducted for ZBC and Allied Timbers. We also reduced employment costs in a number of SOEs (for Tel-One by 15 percent, and National Social Security Authority by 25 percent). In addition, the Radiation Protection Authority of Zimbabwe reduced its overall costs by 30 percent.”
Minister Chinamasa and Dr Mangudya further committed to Government’s intent to clear arrears with international financial institutions.
“We are ready to clear the outstanding arrears with (International Financial Institutions), as outlined in the Lima meetings. With the reform agenda outlined, we believe that after clearing these arrears, we will be in a position to present a comprehensive and ambitious reform programme that could be supported by a Fund financial arrangement in close collaboration with other IFIs. As part of this process, we will seek a debt treatment by the Paris Club. We aim at maintaining a sustainable debt burden after arrears clearance which will be instrumental in maintaining macroeconomic stability.”
In a statement, the IMF said Zimbabwe’s employment costs continued to be the main source of fiscal pressure, consuming about 82 percent of all revenue.
However, the IMF commended efforts being undertaken to rectify this and said the country was meeting its agreed US$150 000 monthly payment to the organisation.
“The authorities have committed to increase payments to the IFIs as their payment capacity increases. In addition, Zimbabwe continues to benefit from targeted Fund (assistance) to address policy challenges, strengthen institutional capacity, and support its ongoing reform efforts.”
This, added the IMF, could lead to full re-engagement.