By Alois Vinga
FINANCE Minister, Mthuli Ncube’s is keen on restoring inflation eroded wages’ value while repositioning the country’s battered economy onto a recovery trajectory – from the projected minus 4.5 % to a growth of 7.4 % in the forthcoming year.
The country’s working population has lost a significant chunk of its salaries’ worth after government took the unpopular step to abandon the multi-currency system anchored by the US dollar for the much-resented local dollar.
The local currency has crumbled rapidly after initially exchanging on a 1:1 basis with the US dollar upon reintroduction 2016 to almost $100 for a single US dollar, basing on prevailing parallel market rates preferred my most locals.
Both public and private Zimbabwean workers earning in local currency have been the biggest casualties of the slide with most employers preferring to maintain wages at a constant even though charging goods and services in US dollars or the local equivalent.
The disequilibrium obtaining has caused endless labour unrest in the country with teachers, doctors and nurses dominating the often acrimonious salary review discourse.
Health sector workers this year staged a three months long strike protesting government’s failure to act in tandem with harsh realities obtaining on the economic landscape.
But speaking during the launch of the 2021 Pre-Budget Strategy Paper (BSP) – a document meant to facilitate discussions on the budget priorities – Ncube committed to seeing eroded wages restored.
“The recovery in consumption is mainly anchored on expected stabilisation of inflation through ongoing policy interventions which should aid restoration of purchasing power of consumers.
“Employers including the government will continue to review wages and salaries in line with inflation developments and budget capacity to restore eroded incomes as the economy recovers,” he said.
Premised on the National Development Strategy (NDS I), a policy which will succeed the Transitional Stabilisation Plan and expected to run between 2021 to 2025, the economy is predicted to recover from a projected contraction of – 4.5% in 2020 to a growth of 7.4%.
In the forthcoming year, public investment is also expected to contribute 5.1% to GDP growth as the government pushes on with some of the projects that stalled during the year.
From the production side, all sectors of the economy are expected to register positive growth in 2021, with the agriculture and mining sectors expected to record the highest growth rates of about 11% each, and tourism (6.8%) and electricity (10%) among the major sectors.
“Inflation is projected to slow down significantly, with average annual inflation projected at 134% during the year 2020. The slowdown in inflation will be attributed to deepening of the foreign currency auction market which is expected to sustain exchange rate stability,” Ncube said.
The Reserve Bank of Zimbabwe is also expected to continue to curtail growth in money supply which is one of the major drivers of inflation among other positives.