Price hikes hit Zim... govt warned against repeat of 2008

2018-10-05 13:03
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The Zimbabwean government has reportedly said that it would soon launch the Transitional Stabilisation Programme (TSP) aimed at addressing industry concerns and help improve its competitiveness for regional and international markets.

According to the state-owned Herald newspaper, this came as the southern African country struggled with a wave of price increases which the government described as "largely unjustified".  

The report quoted the Industry and Commerce Minister Mangaliso Ndlovu as saying: "I have not received a brief on price increases and the magnitude, but I know it is a culture that has been developing in the last few weeks, people just increase prices."

Ndlovu said that the TSP would promote local production.

The Financial Gazette reported on Friday that prices of basic goods such as mealie-meal, meat, soap, toiletries, rice, sugar and vegetables were spiralling out of control due to a currency crisis precipitated by foreign currency shortages.

Record hyperinflation

The report said that the price increases were set to "worsen consumers' situation ecause disposable incomes have always been under pressure due to a combination of poor salaries, high unemployment and the fact that Zimbabwe is a high cost producer".

As the country's economy continued to deteriorate, experts urged President Emmerson Mnangagwa and his government to "make the requisite changes needed to turn around the untenable situation" said a Daily News report.

Both businesses and economists warned that the country could be sinking to "dire levels that were seen in 2008 when record hyperinflation decimated the Zimbabwe dollar and left millions of citizens impoverished", the report said.

The Zimbabwean government recently acknowledged that the country's surrogate currency - the bond motes – were not equal to the dollar.

According to New Zimbabwe.com, the government instructed banks to separate accounts for local and foreign currencies, in a fresh attempt to solve the country’s cash crisis.

Multiple currencies

The move, the report said, was part of wide range of reforms that were introduced by Reserve Bank of Zimbabwe governor John Mangudya to curb cash shortages, while the US dollar, the Rand and bond notes were accessible on the black market.

The southern African country adopted the use of multiple currencies in 2009 after its currency had been rendered worthless by hyperinflation.

The US dollar had been the main transacting currency but it has been in short supply since 2015 due to low exports and externalisation.

This led to the introduction of a surrogate currency in November 2016 to ease chronic shortages of US dollars, and to encourage exporters who earn the country foreign currency.

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Read more on:    zimbabwe  |  southern africa

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