Zimbabwean Finance Minister Tendai Biti says his government faces a shutdown as projected diamond revenues from the controversial Marange fields in the east of the country fail to live up to expectations.
According to Reuters news agency, Biti told a press conference late Thursday that the government will soon suspend most capital projects and stop paying the recently raised civil servant allowances if it fails to boost its coffers through diamond revenues.
He said inflows from diamond sales during the past two months amounted to only US$19.5 million against a projection of US$77 million.
"Diamonds will have to deliver, otherwise the only thing we have to do will be to pay wages and government will have to close," said Biti.
"We cannot have a situation where 70 percent of revenue is going towards wage demands. That's not an acceptable position. Wages are crowding out other government expenditures," he said.
Biti said actual revenue collections for January and February totaled US$488 million against targeted inflows of US$549 million.
Observers said the government should improve its tax collection methods, rationalize state operations and establish the real size of the public service to cut unnecessary costs.
Economist Godfrey Kanyenze of the Labor and Economic Development Research Institute of Zimbabwe said government will definitely shutdown if revenue collections remain subdued.
Meanwhile, the finance ministry said it’s working on new legislation to protect citizens from loan sharks who it says are ripping off ordinary people through high and unsustainable interests rates.
Secretary Willard Manungo told parliament’s portfolio committee on the small and medium enterprises that the government, after failing to persuade finance houses and institutions to reduce interest rates, decided to take the legislative route to avoid more pain being inflicted on ordinary citizens.
He said many small businesses have been crippled with many people's lives being destroyed by the loan sharks.