Many Zimbabwe civil servants are holding their breath this weekend, hoping their delayed salaries will show up in their bank accounts tomorrow.
While teachers and soldiers have been paid, many other lower level civil servants found no salary payments in their bank accounts on Friday.
Civil service salary payments are staggered from about the 15th of each month. There are credible reports that some soldiers, living in barracks in the country’s second city Bulawayo, are short of food as the defence budget is so strained.
Most of Zimbabwe’s domestic banks are critically short of funds after massive withdrawals following Zanu-PF’s election victory last year.
Meanwhile, the International Monetary Fund (IMF), warned this week of tough economic times and decreasing export prices, while encouraging the government to pursue reforms, including slashing the state wage bill.
An IMF staff mission, lead by Alfredo Guevas, was in Zimbabwe to hold discussions on the 2014 Article IV Consultation and the first and second review under the reformist Staff-Monitored Programme.
“The macroeconomic environment is expected to remain challenging in 2014, and the outlook is for continued moderate growth,” the team said in a statement released at the end of the one-week visit.
“Achieving Zimbabwe’s fuller growth potential over the medium term depends on pursuing strong macroeconomic policies, including building up fiscal and external buffers and increasing budgetary resources going to non-personnel related spending, and implementing structural reforms to foster investment, improve the business climate and strengthen governance and institutions, including increasing transparency of the minerals regime.”
The IMF team noted that it would also be necessary for Zimbabwe to engage with its creditors to work towards a solution to the long-standing debt arrears problem.
“Downside risks to the outlook include the possibility of further weakening of export prices, a tightening of external financing conditions, as well as risks related to policy implementation delays. Should these risks materialise, they would adversely impact output growth and fiscal revenue.
“To mitigate these risks, it is important to strengthen fiscal policy, identify potential sources of domestic and foreign financing and address financial sector vulnerabilities,” the IMF said.
The Zanu-PF administration has so far failed to revive the economy, which slipped considerably since the end of the inclusive government at the time of the elections.
The inclusive government did revive some sections of the economy, which had stalled under the previous Zanu-PF-only administration. Some financial stability followed Zimbabwe’s abandonment of the local currency late in 2008.
IMF statistics reveal that the real gross domestic product (GDP) last year was estimated at just above 3 percent, sharply down from 10.5 percent in 2012.
The annual inflation rate decelerated from 2.9 percent in 2012 to 0.3 percent at the end of last year (and further minus 0.5 percent last month), reflecting weak domestic demand, or deflation, and the depreciating value of the rand.
The government’s economic blueprint, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation has failed to excite the market.
The blueprint, which requires R270 billion to implement is, so far, still-born.
Finance minister Patrick Chinamasa has failed to find external funding or loans to pay off the huge foreign debt or finance reconstruction of the country’s shattered and ever shrinking economy.