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Zim veers closer to brink
10/07/2007 08:40 - (SA)
Harare - Zimbabwe's economy veered closer to the brink on Monday with no end in sight to chronic shortages of staple foods and gasoline, and predictions of a standstill in routine business within days.
Police and government inspectors continued cracking down on shopkeepers and sales managers accused of defying orders to slash prices by half in a desperate attempt to halt rampant inflation.
Shelves were bare of cornmeal, bread, meat and other staples, and witnesses said many shops and suppliers were cleaned out by convoys of ruling party supporters coming in after police and inspectors began enforcing the price cuts on June 26.
Economist John Robertson said: "The crunch can't be far off."
Fuel stocks run out
Factories, stores and gas stations had been unable to replace goods sold at below the original cost. The sudden drop in prices had sparked panic buying, stampedes and near-riots by impoverished Zimbabweans.
Fuel stocks had run out, putting an end to the long lines of cars at gas stations.
On Monday, the government ordered private commuter buses to cut fares by three-fourths, promising bus owners they would be able to buy subsidized fuel from the state oil procurement agency.
But, many ignored the directive and simply abandoned their routes. Businesses reported higher absenteeism, with workers failing to arrive at their jobs.
One industrialist said: "We are incurring huge losses. We can't go on like this for much longer. We won't be able to pay our VAT (value added tax), which runs into the billions each month."
He said: "We'll have to lay off quite a number of our people very soon. We've shot ourselves in the foot this time."
1 300 businesses fined
He asked not to be identified. President Robert Mugabe warned on Friday that the government would target unco-operative managers and seize factories that scaled down their operations.
Police said that more than 1 300 businesses had been charged and fined for the past two weeks for defying orders to slash prices in half or hoarding goods.
Court officials said several of 33 top company executives arrested in recent days were fined up to Z$100m ($6 600).
Robertson, the economist, predicted that shortages would worsen dramatically across the board.
He said: "Retailers who can't recover the money they spent on their goods are not going to carry them anymore, and manufacturers who are not allowed to charge more than their production costs are going to stop making them."
According to Robertson, by the end of next week, "we won't have much mobility anywhere and we will have run out of options" as gasoline tanks run dry and gas stations and stores go out of business.
Last week, the government announced it was reviving the long-defunct State Trading Corporation to run businesses that had collapsed or were commandeered.
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