"Banks' Refusal To Bail Out Government Caused Delays In Civil Servants' Salaries"

Former Finance Minister, Tendai Biti, has claimed that banks have been bailing out the government with civil servants’ pay, but some banks “refused to do this” in November leading to delays in payments of the ZiG component.

In an interview with ZimLive, Biti said government revenues have “collapsed to the point that at the present moment, the regime has no capacity to pay wages.” Said Biti:

Revenues seriously dipped after April 5 when they introduced the ZiG. Big companies reorganised. Some retrenched, some relocated and many middle-sized companies simply shut shop.

Only US$2.5 billion was collected up to September against a budget target of US$9 billion. In the last 10 years, the country has managed to collect at least US$4 billion as budget receipts annually but the regime will be lucky to collect US$3 billion by the end of this year.

Thousands of civil servants did not receive the ZiG component of their salaries last month, which included half of their annual bonus.

Despite unions threatening to strike, the government has not explained why some workers did not receive their payments on time.

Two banks were especially impacted: POSB and AFC Holdings (formerly Agribank). POSB reportedly released salaries on November 29, while civil servants with accounts at AFC Holdings were paid on December 2. Said Biti:

In the past few months, banks have actually been paying salaries for the government and then subsequently waiting for a reimbursement.

In November, they refused to do this. They are miffed by the government’s failure to honour what they are owed, particularly their Non-Negotiable Certificates of Deposits (NNCDs).

Biti said that the government has spent millions of dollars in unbudgeted expenditure even as the revenues continue to dry up. He said:

They have been living beyond their means. They did not pull any stops in preparation for the SADC summit in July where they spent millions of dollars.

But what has really killed them is the collapse in revenue collection as a result of a shrinking tax base.

Mthuli Ncube’s policies, particularly exchange control mismanagement and skewed revenue measures, have de-industrialised the country and increased informalisation. Big players have left this economy since 2018 thanks to this finance minister and his government.

This in turn has created a desperate response where Ncube has had to resort to indirect taxes to target the informal sector.

But indirect taxes are regressive and hit the working people harder. No wonder there is such unprecedented disaffection and discontent against [Emmerson] Mnangagwa and his regime.

Biti said the government should “cut taxes, encourage spending and investment, liberalise the ZiG, if not scrap it, and a drastic cut to government expenditure.

More: Pindula News