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Revenue crisis to worsen as Mugabe adds new ministers

Revenue crisis to worsen as Mugabe adds new ministers

mugabe from the photo

By
Published: 18 September 2015

ZIMBABWE – Last week’s appointment of over a dozen of government ministers, which saw President Robert Mugabe adding three new portfolios to his already bloated cabinet, is yet another slap in the face for Finance minister Patrick Chinamasa, who is desperately trying to reduce public expenditure in line with the International Monetary Fund’s (IMF) Staff-Monitored Programme and attendant reforms.By Kudzai Kuwaza

Mugabe appointed 14 new ministers with Abednico Ncube being appointed to the newly-created ministerial post of Rural Development and Preservation of National Heritage, while Simon Khaya Moyo was appointed to the new post of Policy Co-ordination in the President’s Office.

But probably the most contentious is the appointment of Makhosini Hlongwane as Minister Without Portfolio at a time government is hamstrung by severely depleted coffers due to several factors among them a debilitating liquidity crunch, low capacity utilisation of 39% as well as company closures and retrenchments, which have shrunk its tax base.

Instead of trimming his cabinet in line with serious economic difficulties and dwindling government revenues, Mugabe in fact further burdened the already beleaguered taxpayers who will have to foot the bills for the salaries and perks, including new luxury vehicles for ministers appointed for patronage and political reasons, not competence.

One would have expected Mugabe to trim cabinet by combining ministries such as finance and economic planning, environment and tourism, agriculture and lands as well as making the psychomotor ministry a department in the education ministry, for instance, to reduce the size of cabinet and cut expenditures.

The move to bloat cabinet is made more damning when one considers that Mugabe has been urging civil servants to tighten their belts and be patient.

For instance, while delivering a speech on Independence Day on April 18, Mugabe said civil servants must tighten thier belts, citing the harsh economic climate.

However, he has continued being extravagant by among other things globetrotting.

His unexpected cabinet expansion at a time when austerity measures are needed, will exacerbate the situation. Last week’s cabinet appointments come at a time Chinamasa has made an undertaking to reduce the wage bill from more than 80% to under 40% of government expenditure.

This is not the first time Mugabe has appointed a Minister Without Portfolio despite a biting economic recession. The late Elliot Manyika was also appointed Minister Without Portfolio in February 2004,while the late William Nhara was Principle Director in the ministry.

During the recent visit by the IMF delegation, led by Domenico Fanniza, Chinamasa again reassured the Bretton Woods Institution that government was seized with cutting down the wage bill. This was noted by the IMF’s report at the end of their visit last week.

“They have also prepared plans to rationalise public expenditure and reduce public sector employment costs,” the IMF said in its report.
“However, these reforms will require time and deeper efforts before their beneficial impact is felt on the economy.”

But as the IMF was leaving Harare, Mugabe was adding to the bloated cabinet showing a disconnect between what Chinamasa intends to achieve and what his priorities are.

Analysts say Mugabe’s cabinet reshuffle was designed to ensure there was factional and ethnic balancing as well as rewarding of loyalists, like he revealed, when he appointed his cabinet shortly after the 2013 general elections.

Rationalising expenditure was not one of his considerations and this was reflected in his appointments. Economist John Robertson said the appointments could harm Chinamasa’s chances of success when he goes to this year’s annual meetings of the IMF and the World Bank in Lima, Peru, next month, where he will present a strategy to resolve the external arrears with multilateral creditors.

“Before we get help we have to show that we deserve it,” Robertson said.

“But by increasing the cabinet are we showing that we deserve the help?”

Robertson said the cabinet is disproportionate to the size of the country’s economy and population with “portfolios handed out until they had run out of names for ministries”

Robertson said the country only needs a dozen ministerial posts with the combination of several ministerial portfolios into one ministry giving the example of the need to combine the ministry of agriculture with the ministry of lands and information with ICT.

The appointments have also been criticised by various political parties who are baffled that this is happening at a time government is virtually broke.

“This is a complete disgrace. Our roads and railway infrastructure are dilapidated and electricity is only available for about six hours a day countrywide,” MDCT spokesman Obert Gutu said.

“Public hospitals and clinics don’t have any medicines and the whole public health delivery system and education have virtually collapsed.”

The MDC formation led by Welshman Ncube has been equally scathing, saying Mugabe is dishing out cabinet posts like confetti at a wedding at a time the country’s economy is struggling, with over 90% of revenues going towards recurrent expenditures leaving very little for capital outlays.

“It is unacceptable that he hands out cabinet posts as if he is handing out sweets to his kids when government has no money,” said Kurauone Chihwayi the MDC national spokesperson in a statement.

The ministerial appointments are however not the only time that Mugabe has shown that the President is not reading from the same script as Chinamasa.

After Chinamasa presented the 2015 budget last year in which he also emphasised cost cutting due to government’s strained resources, Mugabe created a new War Veterans ministerial post which he assigned to Chris Mutsvangwa. He also brought back the Economic Planning ministerial post which he assigned to Moyo.

A government official, who preferred not to be mentioned said the appointment reflected that the government was not working in unison.
“The appointments by Mugabe show you there are two paradigms within government,” he said.

“The one with the Finance ministry and the other one with the President and they are not in sync. That is the challenge”

Bulawayo based economist Eddie Cross said the decision by Mugabe to add three more ministries, while appointing 10 deputy ministers, at a time the economy is reeling is ‘irrational”

“We are in the middle of a fiscal crisis which in IMF terms is unsustainable and the government increases cabinet’s costs by 25%, it’s crazy,” Cross said.