Harare – The Zimbabwean government indicated plans to cut the public sector wage bill by more than half, to 40 percent of total revenue from the current 80 percent, as the Treasury looks at all options to meet fiscal demands.
Presenting the mid-term fiscal review in Parliament on Thursday, finance minister Patrick Chinamasa also warned that revenue from exports, which account for more than 50 percent of total revenues, are projected to drop by 5 percent as a result of weakening commodity prices as well as a decline in agricultural output in cash crops such as tobacco and cotton.
In the first half of the year, exports grew by 0.4 percent to US$1.23 billion, compared with the US$1.22 billion recorded in the corresponding prior period. Minerals, at US$653 million, continued to dominate the exports basket, followed by tobacco, at US$321 million. The main mineral exports were gold, nickel and platinum group metals, while key agricultural exports included flue-cured tobacco and raw sugar. Zimbabwe’s major export markets are South Africa (68 percent), Mozambique (16 percent) and the United Arab Emirates (8 percent).
Chinamasa said imports for the six months to June had edged up to US$3.1 billion, from US$3 billion in the corresponding period in 2014. He said food imports were projected to increase by 64 percent in 2015, mainly on account of the lower than anticipated 2014/15 season maize harvest following the drought. Wheat imports are also projected to remain high in 2015, reflecting low domestic production levels against the background of declining hectarage under the irrigated winter crop.
Chinamasa spoke of grain importation in the context of critical food shortages. He said the cereal deficit this year necessitated that the country import 700 000 tonnes of grain for food security purposes.
The major sources of imports during the first six months of the year were South Africa (40 percent), Singapore (20 percent), and China and India (7 percent each).
Chinamasa also expressed approval of the new labour law whereby employers can terminate workers’ employment contracts on three months’ notice, saying it would allow companies to match staffing levels to prevailing business operations.
“Let it be known that a flexible labour market is key to our economic recovery,” he said, adding that it would ensure the survival and viability of businesses. He gave the example of Zisco Steel, which had not been producing since 2008 but continued to accrue payroll liabilities, which stood at US$131.5 million at the end of May.
The finance minister also announced a ban on the importation of second-hand clothes, shoes and other basic goods as of August 1. He said the sale of cheap, low quality and smuggled imports was choking both producers and retailers as well as limiting inflows into the fiscus.
ANA