Streamline public sector wages: IMF

ZIMBABWE should focus on a comprehensive economic transformation plan to ensure the viability of the dollarised economy as a policy measure in light of continuous economic decline, the International Monetary Fund said.

Addressing questions on Zimbabwe at an IMF Press briefing from the US accessible online on Friday, Washington Communications Department deputy spokesman Mr William Murray highlighted that there was an urgent need for the country’s authorities to streamline public sector wages as well as accelerate public enterprise reform.

Treasury spends more than 80 percent of revenue on civil servants’ salaries, leaving very little fiscal space for capital projects and in 2015 the Government carried out a civil service audit between February and April aimed at flushing out ghost workers, redundancies and the duplication of roles.

The Government has also acknowledged that when the economy is under-performing as is the case now; public anger is directed towards public enterprises that continue to drain the fiscus.

“A comprehensive economic transformation plan will be important to ensure the viability of the dollarised Zimbabwean economy. The authorities need to take action to streamline public sector wages urgently. They also are encouraged to accelerate public enterprise reform, improve public financial management and develop key infrastructure,” said Mr Murray.

According to Buy Zimbabwe economist Mr Kipson Gundani, the country’s biggest challenge lies in being an unproductive dollarised economy.

“Our problem is that we are not producing as a nation and it is important to look at the factors that are rendering us unproductive. The main issue is being a dollarised economy which is making us uncompetitive hence the need to adopt a softer currency like the rand and become a rand economy,” said Mr Gundani.

Mr Gundani said industries in the country are weak and thus failing to compete with those in South Africa and China which are mass producing.

He said the solution was to deliberately provide a market for locally produced goods through import management similar to the Government’s promulgation of Statutory Instrument 64 of 2016.

“Import management should be of a holistic nature instead of picking few products. A number of sectors need to be nurtured until such a time that they are able to compete on an equal footing with other countries,” he said.

According to Mr Gundani, the country also requires new avenues of financing to supplement export products like gold, platinum and tobacco as well Diaspora remittances. He said new money can never be unlocked without reforms as highlighted by the IMF.

“We need to strengthen our governance systems and address the oversight role on parastatals which are currently a liability to the economy,” Mr Gundani said.