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Zimbabwe Finance Minister Biti Proposes Modest Pay Rise for State Workers

Zimbabwean Finance Minister Tendai Biti on Thursday delivered a mid-term fiscal report to parliament containing an appreciable increase in the annual budget, telling lawmakers that the government will raise the salaries of state workers beginning this month.

Biti predicted a 3.7% increase in gross domestic product this year in an economy leveled by years of political instability, misgovernance and massive hyperinflation.

But he lamented Zimbabwe's low revenue base, adding that the majority of the money being collected by the government in revenues was going to pay wages of civil servants.

Biti upgraded the 2009 budget by more than 20% to US$1.22 billion from the US$1 billion figure he offered earlier this year in his first policy statement.

He said Zimbabwe will soon sell a “grain bond” to finance corn purchases from farmers. Biti did not provide details but was quoted in the state-controlled Herald newspaper earlier as saying that the government was looking to raise $10 million.

The minister scrapped a 5% custom duty on industrial capital goods, reduced import taxes on raw materials to 10% from 15% and extended by another six months duty free imports on basic foodstuffs. He said a 3% royalty would soon be imposed on gold miners.

Correspondent Irwin Chifera of VOA's Studio 7 for Zimbabwe reported from Harare.

Biti's review received mixed reviews. Representatives of state workers said he did not go far enough to address their salary demands. Calculations showed civil servants wages would rise to US$150 a month from US$100, well beneath demands of more than US$400 a month.

General Secretary Raymond Majongwe of the Progressive Teachers Union of Zimbabwe said Biti's fiscal program served the rich of the country, not the poor.

He said his union will meet to decide its response.

But economist Eric Bloch said Biti’s statement was stronger than many expected, and that if the program is closely followed the economy will continue its recovery.

Political analyst John Makumbe of the University of Zimbabwe said he feared Biti’s call for the resolution of outstanding issues troubling the government would fall on deaf ears.

More reports from VOA's Studio 7 for Zimbabwe...