The Zimbabwe government has suspended civil servants bonus payments until 2017 as part of measures to contain the unsustainable recurrent expenditure.
The government also aims to create fiscal space to support the socio-economic transformation drive.
The no easy alternative bold and pragmatic decision is one but many strategies government says it is taking to address the huge expenditure bill and to create the necessary capacity to grow the economy.
Civil servants bonuses will be scrapped in 2015 and 2016 and the situation will be reviewed in 2017 in the event that government is able to build enough capacity.
“We will not hesitate to take bold decisions to take this economy forward and we need to be realistic about our situation,” the Minister of Finance and Economic Development, Patrick Chinamasa said.
Government has been channelling almost 82 percent of the budget towards salaries with monthly employment costs amounting to US$260 million.
According to the fiscal authorities, heavily taxing the private sector is not sustainable, hence the need to create breathing space for the productive sector.
Chinamasa expressed government’s commitment to pay all the outstanding bonus obligations.
To date, treasury has managed to pay US$159 million in respect of civil servants bonuses out of the US$172 million 2014 bonus obligations.
The scrapping of the civil servants bonuses comes at a time pundits have highlighted the need for the country to address the high cost structure which has negatively impacted on both the competitiveness and attractiveness of the economy.
The message has been for the country to live within its means.