GOVERNMENT’s decision to pay the unbudgeted 2016 bonuses to civil servants following pressure from employee unions will likely worsen the debt situation in the country, the Parliament Budget Office said in its recent report.
BY VENERANDA LANGA
The performance analysis report for the first quarter budget indicates that the payment of unplanned for bonuses would worsen the situation of Treasury Bills (TBs) being floated by government, with $180 million TBs now expected to be floated in the market to finance civil servants’ bonuses.
“This comes just after the government decided to clear its contribution arrears to National Social Security Authority (NSSA) spanning from June 2013 with Treasury Bills worth $180,9 million with a tenure of seven years and a coupon rate of 5% per annum,” Parliament Budget Office report read.
In March, government bowed to pressure from civil servants’ unions to stagger payment of their bonuses from April to August when the last batch of civil servants will be paid.
They said as at March 31, 2017, Zimbabwe’s public debt stood at $11,6bn or 82% of gross domestic product (GDP), of which $7,5bn or 53% of GDP is external debt, while $4,3bn (30% of GDP) is domestic debt.
“Of the $7,5 billion external debt, $5,2 billion is in arrears. The country was estimated to have about $2,1 billion worth of TBs in the market as at February 28, 2017, which were issued to bridge the government’s funding gap and clear the central bank’s debt.”
In January, the Reserve Bank of Zimbabwe announced that government issued TBs in four categories, such as long-dated TBs of $549m issued to banks for the acquisition of non-performing loans by the Zimbabwe Asset Management Corporation (Zamco), long-dated TBs amounting to $300m issued for the capitalisation of institutions that include the RBZ, Agribank, Infrastructure Development Bank of Zimbabwe (IDBZ), ZB, Cottco and Caps, medium to long-dated TBs amounting to $780m issued under the RBZ Debt Assumption Act for the Central Bank debt taken over by government, and short-to-medium-dated TBs in an amount of $450m issued to finance the gap between expenditure and revenue collection by government.