Zimbabwe delays paying some salaries as cash crunch bites

Zimbabwe's Finance Minister Patrick Chinamasa presents the 2016 National Budget in Harare, on Nov 26, 2015. More than 80 per cent of its budget is spent on salaries.
Zimbabwe's Finance Minister Patrick Chinamasa presents the 2016 National Budget in Harare, on Nov 26, 2015. More than 80 per cent of its budget is spent on salaries.PHOTO: REUTERS

HARARE (Reuters) - Zimbabwe has delayed paying December salaries for most of its public sector workers to early next month and has not paid annual bonuses, in a sign of a cash crunch that brought threats of strikes from doctors and teachers on Monday (Dec 28).

Doctors working at state hospitals and the main teachers'union demanded the payment of salaries and bonuses before Dec 31, warning of possible strikes next year.

Zimbabwe spends more than 80 per cent of its budget on salaries, mainly for the army, police, teachers and nurses, but only managed to pay soldiers earlier this month.

Finance Minister Patrick Chinamasa said in a statement on Monday that December wages for teachers and other education sector workers would be paid on Tuesday.

"Treasury advises that the Dec 2015 salary payment date for the rest of the public service is also being moved from Dec 29 2015 to Jan 5 2016," Chinamasa said. He could not be reached for further comment.

The government spends more than US$260 million every month on salaries for more than 300,000 of its employees.

Zimbabwe finances its entire budget from taxes because lenders like the International Monetary Fund and World Bank will only consider fresh loans once it clears its debts. Tax revenues are falling as the economy struggles with weak commodity prices and high unemployment.

Chinamasa did not say when bonuses, equivalent to one month's salary and traditionally paid in November, would be paid. "Our December salary and 2015 bonus must be disbursed on or before Dec 31. Our members countrywide will not be able to attend to their duties from Jan 1, 2016 should this be violated," read a statement from the Zimbabwe Hospital Doctors Association.

Last April, Chinamasa said the government would not pay annual bonuses to public workers for two years, citing falling tax revenues, only for President Robert Mugabe to reverse the decision.