ZIMBABWE’S cash-strapped government is scouting for alternative funding to the tune of nearly US$250 million to pay civil servants bonuses, as Treasury wrestles with other unbudgeted-for expenditures critical to avert a humanitarian crisis.
Sources said government was trying to raid cash generating institutions like the Zimbabwe National Roads Administration (ZINARA) for bonus cash but these institutions were equally cash-strapped.
In any case, said one source, ZINARA had already been supporting government in meeting its monthly salary obligations.
Government’s mounting bonus woes come against the backdrop of a potentially unprecedented food insecurity situation in the country next year due to a poor rainfall season.
This has equally seized President Robert Mugabe’s administration, which is holding its annual indaba in Victoria Falls.
The ruling ZANU-PF party has said the annual conference is about “improving the quality of lives of our people”.
While government has been lucky to get support from international agencies, through the World Food Programme, in mobilising resources for food support to starving communities, it has been unlucky in finding partners to bail it out on its fiscal obligations.
Despite the presence of external partners in supporting its humanitarian causes, government will still be required to show its commitment to its people by availing budgetary support to humanitarian efforts.
Sources indicated that there were ominous signs government’s capacity to fund the bonuses had reached breaking point after failure to pay the bonuses to its priority servants, the armed forces, by November as earlier planned.
Other civil servants were expected to get their bonus payments this month.
Finance Minister Patrick Chinamasa, who was not answering calls to his mobile phone, was said to be scrambling “for a resolution of the crisis,” according to one source familiar with developments.
One source indicated that although payslips for soldiers had this month reflected the bonus payments, these were not funded and therefore unavailable in their bank accounts.
The current budget had already been buffeted by carryover obligations from last year, which Chinamasa failed to fund last year due to tightening fiscal pressure.
The carryover expenditures accommodating in this year’s budget related to 2014 bonus payments and other employment related obligations amounting to US$165 million.
Chinamasa said during his budget presentation last month that these “could not be fully met during the 2014 financial year, on account of cash flow constrains”.
Bonus payments for last year trickled into March 2015, with some civil servants having been paid only after threatening to embark on industrial action.
“There is a greater likelihood we are going to fund bonuses from next year’s budget,” one source said, warning, however, that next year’s budget faced “unprecedented pressures building over the past three years”.
Chinamasa has already warned that the 2016 national budget will be under intense pressure “primarily stemming from global developments related to commodity prices and demand, adverse weather conditions, fiscal challenges, as well as institutional weaknesses”.
Institutional weaknesses, he said, were prevalent in government, local authorities, public enterprises and other institutions and were a major source of risks that would undermine the 2016 budget implementation.
The continued decline in international mineral prices would continue to undermine the performance of the mining sector, and consequently the national budget.
Shocks from unfavourable weather conditions, such as an El Nino-induced drought that has already started manifesting in the current season, would have far reaching implications on agriculture, Chinamasa acknowledged.
This will compel government to intervene to stave off deaths from hunger mainly in rural areas.
Further support would be required in the form of input support for rural folks ahead of the 2016/2017 farming season. This would inevitably funded from the 2016 budget.
“The 2015/16 weather forecast predicts a challenging agricultural season, with erratic distribution of rains. This… has potential negative implications on the outcome of the forthcoming agricultural season,” Chinamasa warned.
Responding to questions from the Financial Gazette this week, the Meteorological Services Department (MSD) acknowledged that the wet season would start much later than last year, which was characterised by short wet spells.
“The Meteorological Services Department is forecasting meaningful rainfall as from 13th to 22nd December 2015 as the rain bearing systems are getting more organized. The rainfall expected during this period is considered meaningful especially for agricultural purposes as the amounts are expected to be high enough to support agricultural activities,” the MSD said.
The MSD then warned: “Thus the season is anticipated to be shorter than normal as an early cessation of the rainfall is highly likely; a high likelihood of a short season (December –February) is expected. Under such circumstances the season length is most likely going to be compromised.”
Chinamasa noted that these factors would compound “fiscal challenges related to the susceptibility of our public finances to under-performance”.
This would be “against the background of unplanned but unavoidable expenditure exigencies, with implications on the budget balance and its financing”, he said.
But those implications are already apparent, even before government turns over to the 2016 national budget. – By Dumisani Ndlela and Nelson Chenga
Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette