Former Finance Minister, Tendai Biti, has alleged that banks have been supporting the government by covering civil servants’ salaries, but in November, some banks “refused to do this,” which caused delays in the payment of the ZiG (Zimbabwean Government) component of wages.
In an interview with ZimLive, Biti explained that government revenues have “collapsed” to the extent that the government currently lacks the capacity to pay wages. According to Biti, revenues sharply dropped after April 5 when the government introduced the ZiG, which prompted many large companies to downsize, relocate, or shut down entirely.
By September, only US$2.5 billion had been collected, falling far short of the US$9 billion budget target. Biti also noted that in the past decade, Zimbabwe typically collected around US$4 billion in budget receipts annually, but the government may struggle to reach US$3 billion by the end of the year.
The government’s failure to pay the ZiG portion of civil servants’ salaries, which includes half of their annual bonus, left thousands of workers without their due payments last month. While unions threatened to strike, the government has yet to provide an explanation for the delayed payments.
Two banks, POSB and AFC Holdings (formerly Agribank), were particularly affected by the delay. POSB reportedly released salaries on November 29, while AFC Holdings paid its civil servant clients on December 2. Biti revealed that banks had previously been advancing the government’s salary payments but stopped doing so in November due to frustration over unpaid debts, particularly the Non-Negotiable Certificates of Deposits (NNCDs) that the government owed.
Biti further criticized the government’s fiscal policies, noting that it has been living beyond its means. He cited unplanned spending for the SADC summit in July as an example, which depleted financial resources. Additionally, Biti blamed the country’s shrinking tax base for the government’s inability to collect sufficient revenues.
According to Biti, the mismanagement of exchange controls and revenue policies under Finance Minister Mthuli Ncube has contributed to the de-industrialization of the economy and a rise in the informal sector. This shift, he claimed, has led to the departure of significant economic players since 2018. In response, the government has resorted to indirect taxes, which he described as regressive, burdening working-class citizens more heavily.
Biti called for urgent reforms, including tax cuts, encouragement of investment and spending, liberalization or elimination of the ZiG, and a drastic reduction in government expenditure.
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