Zim expects $700m budget deficit for 1H 2017

Zim expects $700m budget deficit for 1H 2017
Published: 24 August 2017
GOVERNMENT is expected to have accumulated a budget deficit of around $700 million during the first half of this year, far above the full year projection of a $400 million deficit, a Treasury source has revealed.

This appeared to suggest that the deficit could spiral beyond the $1,4 billion reached last year, which was 10 percent of gross domestic product and over 9,3 times the initial target of $150 million.

The Financial Gazette could not verify the budget deficit figure with the Minister of Finance and Economic Development, Patrick Chinamasa, who is expected to give a Treasury update at the beginning of next month with details of expenditure and revenue for the second quarter of the year.

The source said much of the deficit emanated from civil service bonus payments, also known as the 13th cheque. Bonuses account for as much as a month's wage bill.

Chinamasa last month indicated that government had implemented a wage bill rationalisation exercise that had reduced government's baseline employment costs bill, from a monthly level of around U$262 million in 2015 to around US$252 million in 2016.

Initially, government had said it was unable to pay bonuses for 2016 because of fiscal problems, and had offered to pay the bonuses in the form of land for residential properties. Government workers rejected this offer, insisting they wanted their bonuses in the form of cash.

The bonus payments, which were staggered, only started in April and were reported to have been completed this month.

Already, workers' unions have called on government to start preparing for this year's bonus payments, which they want paid before year-end.

With elections in 2018, there is a likelihood that government will capitulate to placate the civil servants, a critical pillar in the country's electoral process and a major voting bloc that can decide the outcome of an election.

The country is scheduled to hold elections next year between March and July, with the ruling ZANU-PF party having already endorsed the incumbent, who turned 93 years this year, to stand on a party ticket.

Mugabe is expected to face his long-time deputy, Joice Mujuru, who was sacked from the party in 2014 for allegedly plotting a coup against his boss, and Morgan Tsvangirai, the leader of the MDC party which formed a coalition government with ZANU-PF after a disputed presidential election in 2008.

There are talks for the opposition to field a single candidate against Mugabe, but a deal has not yet been reached.

Chinamasa last month indicated that government was concerned with the rapid growth in the fiscal deficit, with Cabinet directing at its 18th meeting in June that government ministries and departments should immediately adopt expenditure cost-cutting measures to restore the fiscal deficit to sustainable levels.

But President Robert Mugabe was to later criticise the sacking of 2 000 youth officers in the Ministry of Youth Development, Indigenisation and Economic Empowerment, saying these should be reinstated.

He said they had been dismissed without Cabinet approval.

The youths are said to play a critical role in ZANU-PF's electoral campaigns particularly in rural areas
- fingaz
Tags: Chinamasa,


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