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Zimbabwe
Government backtracks on price controls
By Stephen Chadenga
Tuesday, September 11, 2007
Gweru, Zimbabwe--In Zimbabwe's third largest city, Gweru, along 6th street, at a butchery, consumers jostle at the entrance door. They shove to get hold of a scarce delicacy--beef. On the opposite side of the same street, at a bread shop, there is an as long and winding queue. With dejected faces people wait impatiently. They have been told that it (bread) is still in the oven for about 45 minutes. Such has become the life of consumers in this Southern African country since the government instituted price slashes by 50 % last July. Endless queues and unavailability of basic items. The basic commodities have disappeared from supermarket shelves. They are being sold at exorbirtant prices on the black market.
President Robert Mugabe's government alleges they decreased prices following the realisation that some sections of the business community are 'secretly' working with the main opposition political party, the Movement for Democratic Change, to cause discontent among the general public and effect 'illegal' regime change. The business community, however argues the affected prices are not viable to continue operating. Even consumers, whom the government says they are cushioning from price increases, now agree that some of the prices are too low and unrealistic. The state controlled weekly, The Sunday Mail quoted consumers calling for a lasting solution to the price impasse.
"The margins at which the prices are being raised is too slender. There is need to match the demand and supply situation by looking at the dynamics of the market," one Harare consumer says.
Recently, the government approved price increases of sugar, chicken, cooking oil,soap, shoes and farming inputs. The goods are still to be readily available in shops. At last week's Southern African Development Community (SADC) summit in Lusaka, leaders from the regional bloc agreed Zimbabwe's ailing economy needs a rescue package. The leaders, however do not agree on how the proposed plan should be effected. South African Finance Minster, Trevor Manuel, said in a televised interview last Tuesday, his country would not cast taxpayers money into rescuing Zimbabwe's economy from drowning.
"We cannot decide what kind of economy Zimbabwe must have. They must get the prices to work. They must drive the changes. We cannot commit financial resources."
Ironically Zimbabwe's Finance Minister, Simbarashe Mumbengegwi, says the government will continue with price controls. He says the month-on- month inflation figures show government is winning the inflation battle.
"We are happy. From the figures I have seen I am happy that month-on month inflation is going down." He adds that as government as far as pricing of basic commodities is concerned "we will continue to regulate".
The country's inflation figure is at a record high 7634.8%, making it the largest in the world. It is estimated that 60% of the country's 13 million people live on less than US$1 per day.
International financiers like the International Monetary Fund (IMF) are not happy with the economic policies being implemented by the Zimbabwean government. IMF Managing Director, Rodrigo Rato, recently told a news conference in Maputo, the capital of Mozambique, that "we have been emphasising with the Zimbabwe authorities the need to address the very extreme and deteriorating macro-economic environment.
'We are not encouraged by responses of the authorities....Our advice to the Zimbabwe authorities is not the one they are applying."
