The IMF’s resident representative in Zimbabwe warned the
government against boosting wages for state workers after the introduction of a
new currency pushed up inflation and reduced spending power to a tenth of what
it was as recently as February.
In the six years to 2016 Zimbabwe boosted pay for its about
400,000 civil servants to a level where their pay accounted for more than 90%
of tax revenue compared with 40% in 2010, Patrick Imam, the IMF’s
representative, said.
“The government wage bill is now on a sustainable footing,”
he said in response to questions. “Looking ahead, it is crucial that public
wage growth be aligned with economic growth and government revenue.”
This puts the IMF at odds with finance minister Mthuli
Ncube, who said in an interview that he is in favour of boosting wages in the
public and private sectors to restore living standards and create consumer
demand.
Ncube has also said he expects the economy to contract in
2019 for the first time since 2008.
“What people are feeling is really wage compression,” he said.
“Prices adjusted instantly to the exchange rate, but wages have been too slow
to catch up with the adjustment. The issue is about wage adjustment and I’m a
big champion of wage adjustment.”
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