(4 minutes read)
· Zimbabwean President Emerson Mnangagwa has hiked civil servants’ salaries in local currency by 50% and also awarded them a
US$75 Covid-19 allowance starting this month
· This was done amidst public unrest due to severe scarcity of essential goods and rapidly rising inflation
Zimbabwean President Emerson Mnangagwa has hiked civil servants’ salaries in local currency by 50% and also awarded them a US$75 Covid-19 allowance starting this month. This was done amidst public unrest due to severe scarcity of essential goods and rapidly rising
inflation
The decision is seemingly linked to the health sector workers staging a demonstration at one of the biggest referral hospitals in Harare. They were demanding remuneration in foreign currency to cope with the ever-rising cost of living with the Zimbabwean dollar. There was also
unconfirmed reports that the security services were plotting to overthrow Mnangagwa. The economy has been through harrowing experience
since the new president assumed the office. Strikes and demonstrations are common day occurrences.
Finance Minister Mthuli Ncube said that the Zimbabwe civil servants salaries adjusted by 50% with immediate effect. In addition, a non-taxable Covid-19 allowance of US$75 per month will be implemented for civil servants whilst pensioners will get US$30 per month. The US
dollar allowances will be paid for three months, while the civil servants have now been asked to open Foreign Currency Accounts with
local finance institutions.
The Reserve Bank of Zimbabwe is urgently addressing the domestic payments infrastructure in light of the increased need for ransactability. The introduction of the US dollar allowances for the Zimbabwean civil service could reduce demand for Zimbabwe’s new local bank notes.
The government allocating dollar allowances, experts say, is effectively re-dollarizing the economy. They feel that the government’s plan is short-sighted since it may stretch the government coffers, since the dollar payments as part salaries would act as a drain on the dollar reserves of the central bank.
