Zimbabwean Finance Minister Tendai Biti told Parliament Thursday that the government can't afford to increase civil servant salaries as it is under intense pressure to do, and still carry on day-to-day operations due to a fall-off in revenues.
He said Harare faces serious cash-flow problems with a looming US$500 million deficit for 2011. Consequently, he said, it is not possible for the government to raise base pay for public employees to US$253 a month as negotiators have recommended.
Biti said the government brought in significant revenues in March and June as quarterly corporate taxes were paid. But otherwise it has not been able to hit its US$230 million monthly target. He ruled out a supplementary budget as there are no funds to back one.
Economist John Robertson said Biti’s projections are on target as the economy struggles to take off following a virtual collapse in 2008. "Very little is being squeezed from taxes and the situation is likely to get worse as the economy remains stagnant," he said.
Zimbabwe’s three ruling party principals recently ordered Biti to award civil servants a pay increase as promised by President Robert Mugabe earlier this year.
Biti has stated that civil service salaries cannot be increased until more is known about the disposition of revenues from the controversial Marange diamond field, and until an estimated 75,000 non-working civil servants are purged from state payrolls. Many of them are youth militia engaged by the previous Mugabe government.
Zimbabwe is running on a US$2.7 billion budget with little funding from the international community outside humanitarian items, and has some US$7 billion in foreign debt.