IMF Urges Zimbabwe Government to Resist Public Sector Wage Pressures
The IMF says public sector wage increases will stoke inflation and reverse economic gains posted since the unity government was formed
Sources said an IMF team now in the country for economic consultations told the Treasury not to give in to mounting pressure from state workers demanding salaries up to US$500 a month. The International Monetary Fund has again urged the Zimbabwean government to resist pressure to boost public sector wages even as war veterans forced their way into the Ministry of Finance demanding salary increases for civil servants. Sources said an IMF team now in the country for economic consultations advised the Treasury not to give in to rising pressure from state workers demanding that salaries now running less than US$200 a month be increased to around US$500. The sources said the IMF delegation expressed concern that public sector wage rises would stoke inflation and reverse economic gains made since 2009, when the current national unity government was formed ending a post-election impasse. Zimbabwe is spending 70 percent of revenues on public sector wages. Economist John Robertson said civil servants should forget about pay increases as the government is not collecting a reasonable amount of taxes, cannot account for sales of diamonds from the rich Marange field, and cannot attract foreign investment. “The government can’t increase the wages when there is no money with which to meet such big payments and as a result they have to live within their means,” he said, adding that the government cannot run deficits if it is unable to borrow from the public. The IMF delegation conducting so-called Article IV consultations is to meet with officials of the Reserve Bank of Zimbabwe for an update on reforms at the central bank. Sources said the team is also due to meet with Investment Minister Tapiwa Mashakada and other senior officials. The delegation is to conclude its mission on March 30. On the labor front, Air Zimbabwe pilots who went on strike Tuesday have paralyzed the carrier resulting in the cancellation of domestic and international flights. Sources said the pilots, demanding payment of outstanding salaries and allowances amounting to US$9 million, have vowed not to go back to work until their demands are met. But local media quoted Air Zimbabwe Chairman Jonathan Kadzura as saying that his company does not have money to pay the striking pilots and support staff.