FINANCE minister Mthuli Ncube says government has started paying bonuses for civil servants after recording a primary budget surplus of $29 million in October, a first in decades for the southern African nation, which has been battling the effects of unsustainable levels of excessive debt and a widening current account deficit.
BY Kuda Chideme/Xolisani Ncube
Addressing journalists on Thursday, a week after he presented his maiden budget statement, Ncube said the Treasury was able to absorb the costs of paying out bonuses as the country’s finances were beginning to shape up.
He said Treasury would pay out the bonuses this year and not carry them forward as had become the norm in previous years.
“We have a primary surplus of $29 million. This is the first time it has happened in the longest time. Of course, we have interests to pay from the previous debts, but it is as good as balanced. But we are walking the talk when it comes to fiscal discipline and consolidation.”
According to the budget, Treasury expects to fork out $174,6 million for bonus payments to its workforce estimated at more than 500 000.
Ncube, a former economics professor who has the blessing of President Emmerson Mnangagwa to turn around the country’s tanking economy, is at loggerheads with the Zanu PF old guard for his plans to cut government spending.
Under former President Robert Mugabe, party hardliners had been accustomed to hijacking government-funded programmes to bolster political capital, but Ncube has pledged to rein in on unchecked spending and bring the country’s budget deficit to 5% of gross domestic product (GDP) by next year.
“We are walking the talk as we said we would. We are well on our way, as long as we carry on this path. We are balancing the budget month on month, already we are on track to meet the 5% target by December 2019,” he said.
Between January and September this year, government expenditure reached $6,5 billion against a target of $4,1 billion.
As a result, the cumulative budget deficit for the period January to September 2018 stands at $2,7 billion (10,9% of GDP) and is projected to remain within that range by year end.
In the full year, expenditure is seen peaking at $8,2 billion, against a target of $5,3 billion, implying an expenditure overrun of $2,8 billion.
Financing of the deficit has normally been done through issuances of Treasury Bills.