Harare- Zimbabwe admitted Thursday it was struggling to pay civil servants, with government salaries eating a whopping 96.8 percent of the annual budget as a worsening economy fuels protests against President Robert Mugabe's rule.
Presenting the mid-term budget to parliament, Finance Minister Patrick Chinamasa revised the growth rate from the projected 2.7% to 1.2%, blaming the decline on an ongoing regional drought, investment shortfalls and a perennial cash crunch.
"The economy is facing strong headwinds, with major challenges being experienced in the economy and business activity during the first half of the year than what the 2016 national budget anticipated," Chinamasa said.
"The outlook, based on the status quo, points to a situation where projected revenues fall short of meeting employment costs, leaving no room for expenditure on operations and maintenance as well as capital projects."
The budget deficit, he said, was expected to top $1 billion (900 million euros) by year's end if current trends persist.
Zimbabwe's economic crisis has worsened this year.
The cash-strapped government has been slow to pay the salaries of public sector workers,resorting to staggered pay dates for various departments.
A string of protests has since erupted, despite Mugabe's record of deploying the ruthless security forces to crush public dissent.
A one-day strike in July, called by trade unions and Christian pastor Evan Mawarire, shut down offices, schools and some government departments.
Mugabe has repeatedly vowed to fight back, with threats of cracking down on protest leaders.
Police last week banned protests in the capital for two weeks as a coalition of opposition parties planned street marches to press for reforms ahead of the next general election in 2018.
A high court overturned the ban on Wednesday.