The International Monetary Fund (IMF) has said it will not lend more money to Zimbabwe, according to the BBC, because the country has been in arrears on previous loans since 1999, while its treasury spends more than three quarters of fiscal revenue on government wages.
An IMF team is currently in Harare working to help the government revive its stricken economy by helping it clear and push back repayments of about $9bn in external debts, but until then assistant director for Africa Domenico Fanizza said fresh loans will be impossible.
“We cannot in the current situation, because Zimbabwe runs arrears with the Fund and also other institutions like the World Bank and African Development Bank,” he said.
Fanizza also expressed concern about the government spending more than three quarters of tax revenues to pay the salaries of more than 250,000 workers employed by the state.
Zimbabwe’s Finance Minister, Patrick Chinamasa, admitted he was “embarrassed that our wage bill is some 76% of whatever revenue we receive. It’s not good, it’s not sustainable.”
Earlier in the year, President Robert Mugabe also raised salaries for government workers by 14% early this year, in order to keep promises made in the run-up to last year’s election, and it is feared any move to reverse that raise would provoke unrest among well paid civil servants.
The economic situation in Zimbabwe is also not being helped by the diamond sector, where the country’s leading diamond mining company, Mbada Diamonds has halved the salaries of its employees, including geologists and engineers, after reportedly running into production losses.
According to New Zimababawe, news of the wage change was conveyed to the company staff in an email addressed from the company’s senior executive assistant to the Chairman, Selina Zhuwarara.
Mining efforts in the Chiadzwa diamond fields in particular have also had a negative impact on local job creation, as residents have been relocated from previously self-reliant villages to rudimentary facilities in Arda Transau, where there is neither infrastructure nor opportunity for employment.
“The mining companies have not done enough in terms of corporate social responsibility – the locals are not benefitting anything. They must do more. Let them be warned that our patience is now being strained,” Manicaland Governor Chris Mushohwe told Nehanda Radio.