Harare – A crippling cash shortage has left thousands of Zimbabwean civil servants unpaid, with former finance minister Tendai Biti laying the blame squarely at the feet of the current administration. The non-payment of the ZiG component of salaries last month, which included a bonus, sparked outrage and threatened industrial action from unions....CLICK HERE TO CONTINUE READING.>>
While the government remained tight-lipped on the reasons for the delay, Biti has offered a stark explanation, painting a picture of a government increasingly reliant on bank bailouts to meet its payroll obligations.
Thank you for reading this post, don't forget to subscribe!Two banks, POSB and AFC Holdings (formerly Agribank), were particularly affected, with payments eventually arriving on November 29th and December 2nd respectively. This, according to Biti, highlights a desperate situation where banks have been effectively financing the government’s wage bill, a practice that faltered in November.
“In the past few months banks have actually been paying salaries for the government and then subsequently waiting for a reimbursement. In November, they refused to do this. They are miffed by the government’s failure to honour what they are owed, particularly their Non-Negotiable Certificates of Deposits (NNCDs),” he explained.
The root of the problem, Biti argues, lies in a catastrophic collapse in government revenue. “Revenues seriously dipped after April 5 when they introduced the ZiG. Big companies reorganised. Some retrenched, some relocated and many middle-sized companies simply shut shop,” he told ZimLive in a recent interview.
He cited alarming figures: “Only US$2.5 billion was collected up to September against a budget target of US$9 billion. In the last 10 years, the country has managed to collect at least US$4 billion as budget receipts annually but the regime will be lucky to collect US$3 billion by the end of this year.”
This revenue shortfall, he contends, has left the government incapable of meeting its financial obligations. Biti further accuses the government of reckless spending, exacerbating the already dire financial situation.
“They have been living beyond their means. They did not pull any stops in preparation for the SADC summit in July where they spent millions of dollars. But what has really killed them is the collapse in revenue collection as a result of a shrinking tax base.”
He directly blames Finance Minister Mthuli Ncube’s policies for the economic downturn.
“Mthuli Ncube’s policies, particularly exchange control mismanagement and skewed revenue measures, have de-industrialised the country and increased informalisation. Big players have left this economy since 2018 thanks to this finance minister and his government,” Biti asserted.
This, he says, has forced the government to rely on regressive indirect taxes targeting the informal sector, further burdening ordinary citizens.
“This in turn has created a desperate response where Ncube has had to resort to indirect taxes to target the informal sector. But indirect taxes are regressive and hit the working people harder. No wonder there is such unprecedented disaffection and discontent against [Emmerson] Mnangagwa and his regime.”
The situation, according to Biti, is dire. “Government revenues have collapsed to the point that at the present moment the regime has no capacity to pay wages,” he stated bluntly.
He outlined a path to recovery, advocating for significant policy changes: “Zimbabwe’s pathway out of the current crisis required the government to “cut taxes, encourage spending and investment, liberalise the ZiG, if not scrap it, and a drastic cut to government expenditure.”
He expressed little hope for such changes, however, concluding with a scathing assessment of the current administration: “Instead, they are digging their heels and accelerating the same issues that have brought chaos. When we say this is the worst government in the history of governments, this is not an unfair jibe, it’s empirical.”
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