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E277M FOR MUCH-AWAITED COLA

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MBABANE – True to its commitment, government has set aside E277 million for the cost-of-living adjustment (CoLA).
Yesterday, Minister of Finance Neal Rijkenberg tabled a budget that accommodates relief to civil servants, following a three-year span of having their salaries colluded by 19.85 per cent inflation.


The allocation set aside for CoLA by Rijkenberg is estimated to be the three per cent government had vowed to afford beginning of the upcoming financial year 2020/21.


Currently, estimates of the wage bill are said to be E8.44 billion, which corresponds to 37 per cent of government’s expenditure. This figure, despite the advice of the International Monetary Fund (IMF), has been escalating over the years.
The introduction of the E277 million is expected to escalate the wage bill to E8.717 billion. On top of this amount, government also set aside E113 million for notching.


A notch is a scale or level of increment in rank in the civil service pay structure. With the addition of the money set aside for notching, the wage bill shall be increased to E8.83 billion.


increased


When announcing the increased wage bill, Rijkenberg said an unfortunate consequence of the cash flow challenge, largely a contribution of many factors, was that it had resulted in government not being able to grant CoLA for the past three years.
He said: “I would like to thank the Public Service Associations (PSAs) and their members for being tolerant and understanding of these difficult times that we are trying to overcome.


“We have continued to provide and pay for notching that has taken place every year, however, this has only been a benefit to some civil servants. This notching has increased the national wage bill with an average of 1.5 per cent annually. This year we have budgeted E113 million for notching and E227 million for CoLA.”


While announcing this, the minister noted that the five most recent IMF and World Bank country reports had cautioned Eswatini’s largest budgetary ‘outlier’ on the expenditure side.


advice


Furthermore, he said, the institutions had also noted that the single largest contributor to the fiscal deficit was the size of the wage bill.  This advice was also sent to government by the IMF’s Executive Directors through Article IV consultation concluded on January 30, 2020.
The document said: “Specifically, they (directors) encouraged the authorities to contain public wage spending and administrative expenses, rationalise transfers to state owned entities, prioritise capital projects, and broaden the tax base.”


Given this development, in essence, it means government has now in 11 years failed to do one thing; and one thing only – to minimise the wage bill.
This is despite that in the past two years; it had embarked on an exercise to freeze employment.


To this, Rijkenberg said: “Since the implementation of the freeze on employment, the number of civil servants has been reduced by a little over one thousand. As much as these policies and  trends  need  to  continue,  we  also  must  ensure  that  the  quality  and effectiveness of service delivery is not affected.”
Last year, Rijkenberg pronounced that in the last decade, the wage bill had grown by 125 per cent. “In contrast, volatile SACU receipts have made government’s fiscal position untenable, in the medium term SACU receipts are expected to decline due to South Africa’s worsening economic position.”
According to the global lender, Eswatini ranked 2nd highest spender on civil servants among the 53 captured countries.

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