Maravi

(HERALD) Biti insists no cash for civil servants

Biti insists no cash for civil servants
Friday, 08 July 2011 02:00
Herald Reporter

Finance Minister Tendai Biti is still arguing that there is no money to award civil servants a salary increase. However, principals in the inclusive Government are reportedly insisting the pay rise announced last week must stand.

Minister Biti's view is reportedly influenced by the IMF, which is helping the Ministry of Finance craft the mid-term budget review. Minister Biti was among the three Cabinet ministers who briefed President Mugabe, Prime Minister Morgan Tsvangirai and Deputy Prime Minister Arthur Mutambara on GPA issues, civil servants' salaries and the media on Wednesday.

Last Friday's increase raised the pay of the least paid civil servant from US$186 to US$253 per month, including housing and transport allowances.

In his presentation to the principals titled "Public Service Remuneration Review Implications", Minister Biti argues that the review will increase the monthly civil service wage bill by US$29 million to around US$104 million against a monthly average of US$75 million from January to June.

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By December, the cost would be around US$204 million inclusive of the bonus payment, the minister says.

He also said the Public Service Remuneration Framework entailed that salaries of workers of Grant Aided Institutions be adjusted in line with the review for the civil service.

The monthly wage bill of these institutions will rise by around US$4 million to US$19 million per month.

Minister Biti said the pension bill would also rise by US$7 million to US$27 million per month.

"Implementation of Option B1 (salary review), therefore, increases the monthly employment cost bill, excluding employer contributions for medical insurance and NSSA, to around US$150 million from the current monthly average of US$110 million.

"The additional cost of the July review on the 2011 budget is thus estimated at around US$263 million.
"Cumulatively, the additional employment cost will amount to US$373 million after taking into account the existing shortfall of US$110 million," Minister Biti says.

He said the projected outturn on employment costs inclusive of employer contributions for medical insurance and NSSA was estimated at around US$1,8 billion against a budget provision of US$1,4 billion.

The 2011 budget provides for expenditure amounting to US$2,7 billion with US$1,3 billion reserved for operations and capital expenditure and the rest for labour costs, the Minister argued.

"The resulting employment costs outturn of US$1,8 billion reduces budget support for operations and capital expenditure by around US$400 million to US$0,9 billion.
"The anticipated diamond revenues of US$167 million are therefore not adequate to cover the US$400 million gap.

"Given this development, the rationalisation of budget expenditures to the tune of US$233 million becomes inevitable."

Minister Biti said this entailed foregoing spending on budgeted programmes and projects in such areas as security services, social expenditure in health, education, social protection and infrastructural rehabilitation and development.

He said the restructured 2011 budget would not be able to accommodate additional national demands amounting to US$371 million in the following areas:

* grain procurement

* support to food insecure household(s)

* support for the 2011/12 vulnerable farmers input scheme

* 2011 winter wheat programme

* student support

* on-going housing works; and

* arrears to service providers

"The implications and impact are negative as shown above and I wish to bring this to the attention of Cabinet," Minister Biti said.

But sources said last week's salary increase was irreversible and the principals' stance was that money has to be found.

President Mugabe has maintained that civil servants' salaries must be improved because they were pathetic.

PM Tsvangirai was also quoted in media reports saying last week's increase was too little because it left Government workers still earning below the Poverty Datum Line.

Labels: IMF, NEOLIBERALISM, TENDAI BITI

posted by MrK @ 10:18 PM