Zimbabwe has scrapped payment of bonuses to civil servants amid an admission by the government that it is struggling to raise $260 million (Sh23bn) a month to pay its workers.
The country’s economy has been on a downward spiral since President Robert Mugabe’s ruling Zanu PF party won a controversial election in 2013.
Finance minister Patrick Chinamasa said the freeze on the annual bonuses will be reviewed in the 2017 budget.
Zimbabwe has 500,000 civil servants but the government is currently conducting an audit following indications that its payroll has thousands of ghost workers.
Mr Chinamasa said the government still owed some of its workers $13.4 million for 2014 bonuses and this has led to labour unrest at State universities.
“Government has decided to suspend bonus payments for the civil servants in 2015 and 2016, and the situation will be reviewed in 2017 in the event that we are able to build enough capacity,” the minister told journalists on Monday.
He blamed the collapse of the formal economy for dwindling government revenues, which he said had made it difficult for the Treasury to meet its obligations.
“I would want to clearly state that, as government, we would be more comfortable with a situation where revenue growth is driven by an expanding tax base instead of continuously changing the tax policy,” Mr Chinamasa said.
However, the move was described by the main opposition Movement for Democratic Change (MDC ) as an admission by President Mugabe’s government that it had failed to turn around the economy.
“They stole elections in 2013 thinking that they can do the same with the economy but this has failed,” said MDC spokesperson Obert Gutu. “The only option for this clueless government is to resign and let those who are able to lead the country do so.
“The Zanu PF regime should simply admit that the wheels have now completely come off the fragile and comatose economy. It shows that Zanu PF managed to successfully rig the elections on July 31, 2013 but they have certainly failed to rig the economy.”
Last weekend, workers led by the Congress of Zimbabwe Trade Unions took to the streets in the country’s major centres to protest against government proposals to freeze salary increases.
The Reserve Bank of Zimbabwe says one of the ways the economic collapse can be reversed is a temporary freeze on salary increases. Zimbabwe has been experiencing serious economic problems since around 1997 and the cycle was only interrupted between 2009 and 2013.