Zimbabwe claims it only has $217 left
In an appeal Tuesday to foreign donors to help raise some $200 million, Zimbabwe's finance ministry announced that paying civil servants and government employees had bankrupted the country.
Zimbabwe's finance ministry said it has just $217 left in its accounts after paying the nation's civil servants and government employees earlier this month.
Finance Minister Tendai Biti said the monthly salaries cleared out government earnings and tax revenues in January when he made an appeal Tuesday for foreign donors to help raise some $200 million for a constitutional referendum and elections later this year.
But financial experts said Wednesday that Biti, known for his exaggerated rhetoric in the troubled economy, failed to mention quick returns from income tax, social security payments and increased taxable spending in shops and stores.
Those daily revenues immediately replenish the country's battered coffers, experts say. Nationwide highway toll gates also separately bring in thousands of dollars a day.
The government is the nation's biggest employer – with a work force of up to 300,000 – and salaries routinely account for more than 70 percent of its monthly spending.
Many governments routinely pay out more than they receive, technically making their accounts empty, said Harare economist John Robertson. To fill that gap, they rely on domestic and international borrowing to which Zimbabwe has little access after years of political turmoil and economic meltdown, he said.
January is traditionally a lean month for households in Zimbabwe after festive holiday spending and school fees needing to be paid at the start of the school year.
Zimbabwe's world record inflation in 2008 wiped out savings held by ordinary people that were used to make ends meet, pay family expenses and that bolstered the local money market with cash that could be borrowed, Robertson said.
A black empowerment program also scared off foreign investment and capital inflows that could have made a difference to the state's liquidity.
"It is clear tax revenues have been limited this month but I don't think it's anything new. It has been like this before," Robertson said