Top brass pay cuts
President, VPs & senior officials affected
percent bigger and valued at $24,6 billion.
He said the 2019 budget buttresses the ideals of the Government’s Transitional Stabilisation Programme, which places emphasis on instilling fiscal discipline and enhancing increased delivery of public services.
Coming against the backdrop of economic distress characterised by skyrocketing prices, shortages of foreign currency and parallel market distortions, Prof Ncube said his budget, which runs under the theme, “Austerity for Prosperity”, seeks to stabilise the economy and build a solid foundation for a prosperous economy in line with Vision 2030.
This entails decisively dealing with fiscal indiscipline through use of austerity measures, removal of pricing and policy distortions among others.
Prof Ncube projected a 2018 budget deficit of $2,86 billion, which translates to 11,7 percent of Gross Domestic Product, against a target of $793 million. “It is critical that we reduce public spending on employment costs. As a first step, Government has decided that effective 1 January 2019, a five percent cut on basic salary be effected for all senior positions from principal directors, permanent secretaries and their equivalents up to deputy ministers, ministers and the Presidium.
“This is also extended to basic salaries of those in designated posts in State-Owned Enterprises (CEOs, executive directors and equivalent grades), including Constitutional commissions and grant aided institutions,” said Prof Ncube.
“A standardisation/alignment exercise in remuneration including benefits for Constitutional commissions, will also be undertaken to remove inequity and disparities.”
He said the civil servants bonus, which is usually computed as the sum of basic salary, housing and transport allowances, would henceforth be computed based on basic salary only. Prof Ncube said Government would forge ahead with rationalisation of the country’s 46 embassies and consulates staffed by around 581 home-based and locally recruited staff.
“The above diplomatic presence is currently imposing annual budgetary support levels of around $65 million, which is above available 2018 budget capacity of $50 million. Government has resolved to reduce the number of foreign missions, thereby optimising the utility value realised from the remaining missions as well as avoiding accumulation of arrears and embarrassing evictions of our diplomats,” he said.
“This measure will, however, not apply on imports of commercial motor vehicles and vehicles for use by the physically challenged. Furthermore, payment of customs duty in foreign currency will also apply on selected goods. This measure will also apply on all import VAT and Surtax.”
He further noted that some businesses were pricing their products in foreign currency but were not remitting tax in the same denomination. Such businesses are taking advantage of the arbitrage opportunities on the informal market.
“In order to contain such practices, I propose to compel companies that collect VAT in United States dollars or any other currency to remit VAT using the same mode of payment. This measure will apply on all other taxes,” said Prof Ncube.
Turning to excise duty on cigarettes, the Minister said the specific rate of excise duty does not relate to market developments, since the price of cigarettes has, in some cases, increased by about 30 percent.