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BUSINESS lobby groups have described as bold and sensible the announcement by Finance and Economic Development Minister Cde Patrick Chinamasa to suspend civil servants’ bonuses for two years in order to create fiscal space.
This week on Monday, Cde Chinamasa announced the suspension of all civil servants’ performance bonuses for the next two years, beginning this year, as Government seeks to tame its inflating wage bill and create fiscal space. The minister said the position would be reviewed in the 2017 National Budget.
Confederation of Zimbabwe Industries national president Mr Charles Msipa said it was a tough but necessary measure as Government manoeuvred to create fiscal space.
He added that the move underscored the urgency for action from all players in the private and public sector to work on restoring economic stability.
“It is truly a tough and painful measure but very necessary considering Government’s fiscal quandary. Governments the world over have made such drastic measures to balance their books.
“During the recession in Europe several governments made cuts in pensions and health benefits, so it is not a new thing,” said Mr Msipa.
Zimbabwe National Chamber of Commerce national president Mr Hlanganiso Matangaidze said it was a positive interim move, but Government should quickly seek other ways to create fiscal space.
Mr Matangaidze commended Government’s head-on approach on the matter and said it was the only way to help turn around the economy.
“In economics the basic principle is that people should live within their means and this is what Government is trying to do.
“At least Government is now confrontational on issues on the ground especially issues concerning revenue inflows to Treasury. It is not something to be happy about, but it is a step in the right direction to create fiscal space,” said Mr Matangaidze.
Affirmative Action Group executive director Dr Davison Gomo said it was a sensible move critical for nation building.
“It is neither good nor bad but rather sensible. This is one of the many possible options by Government to create avenues to finance critical projects for the economy to take off.
“Government has been spending money they do not have on recurrent expenditure which was not a solution.
“Government said it was suspending not terminating, which means it is temporary. This is a painful move, but at least it is a sensible way out,” said Dr Gomo.
He, however, said Government should also focus on the flip side which is creating fiscal space by promoting industry.
He said Government should incentivise the informal sector to contribute towards fiscus through tax breaks and other measures.
“We are now in a state of affairs where as a nation we should ask ourselves whether we want to limp or walk. Other options are there and it is now time for pragmatism. We are on the verge of economic recovery, but realistic, head-on decisions for the greater good have to be made,” said Dr Gomo.
Minister Chinamasa said Government had a tax obligation of $172 million in 2014 and still had to pay $13,4 million owed to State universities’ staff.
He bemoaned the collapse of the formal economy and the rise of the informal sector that was evading tax.
The suspension of bonuses, the minister said, was only but part of the bold measures the Government would employ to reduce Government recurrent expenditure in addition to staff audits and channelling of more resources to infrastructure development.
Online Reporter