In a bid to alleviate the effects of the recent devaluation of the Zimbabwean dollar (ZiG), the government has announced that salary increases and an annual bonus for civil servants will now be paid in US dollars.
July Moyo, the Minister of Public Service, Labour, and Social Welfare, explained that this decision aims to support lower-income workers facing the challenges of inflation and widespread poverty. The ZiG’s exchange rate was recently adjusted from 1:14 to 1:24 against the dollar.
Moyo confirmed to the local media outlet The Sunday Mail that the Treasury has already allocated the necessary US dollars for government employees, including an increase in the dollar component of their salaries.
“The government has allocated a substantial amount in US dollars to ensure that all civil servants benefit from these salary adjustments,” said Minister Moyo. “Under the President’s directive, we are prioritising salary increases for lower-income employees to help close the wage gap.”
He mentioned that the Zimbabwean government has pledged to provide civil servants with yearly bonuses this year, and discussions about the schedule for the 13th salary are almost finished.
“We will make an announcement after consultations with Treasury, but the bonus payment is guaranteed,” he said.
In April this year, Zimbabwe introduced the ZiG, which has faced a rocky start on the parallel market despite efforts by the Reserve Bank of Zimbabwe (RBZ) to bolster the foreign exchange system.
Since its launch, the RBZ has implemented various financial strategies to support the ZiG, including a crackdown on illegal foreign currency traders in April.
However, many critics argue that the RBZ needs to make more progress in facilitating a smooth market operation.
To restore confidence in the currency market, they suggest that the bank simplify its processes, reduce bureaucratic hurdles, and tackle fundamental issues like inflationary pressures.
Additionally, they call for greater fiscal discipline, improved transparency, and clearer communication from the RBZ to ensure long-term stability.