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Zim's
finance chief advocates free pricing
Business
in Africa
September 08, 2005
http://www.businessinafrica.net/news/southern_africa/482502.htm
Harare - Zimbabwe's
finance minister Herbert Murerwa has called for the scrapping of
state-administered price controls, launched in 2003 to rein in galloping
inflation, a state-run daily says.
"We should move
away from price controls. They do not help. It is some of these
policies that are creating additional distortions," Murerwa said
in submissions to a parliamentary committee this week.
"We are in a
globalised village. There is no country that tinkers with this kind
of thing," The Herald newspaper quoted him as saying.
The Zimbabwean
economy, which has shrunk by 30% in the past four years, has been
battling hyperinflation and critical foreign currency shortages.
The annual inflation
rate soared to 254.8% at the end of July, up from 164.3% in June,
according to official statistics.
It has been
climbing upwards since 2000 when it stood at 55.9%, rising to 71%
a year later. It reached 133.2% in 2002 before it shot to a record
622% in 2004.
Murerwa said
he would set up a special committee to examine the underlying cause
of price hikes.
However, the
Consumer Council
of Zimbabwe warned that lifting price controls now could be
disastrous.
"We are still
concerned... that in the current economic circumstances where we
have witnessed relentless increases in prices of basic goods and
services," spokesperson Tonderai Mukeredzi said.
"If prices are
left to the free market dictates we will have serious problems because
consumers will not be protected," he added.
Wellington Chibebe,
secretary general of the influential Zimbabwe
Congress of Trade Unions, said he favoured a middle path.
"In a normal
democracy, price control kills business while on the other hand
super profits destroy the social fabric.
"What is needed
is price management where we have prices by negotiation."
Adding to the
woes of Zimbabwe's tottering economy are consecutive years of drought
and a land reform programme launched in 2000 in which some 4 000
white-owned commercial farms were seized and redistributed to blacks.
The latter has
punched a gaping hole in agricultural production, which once accounted
for 40% of the economy, with most of the new beneficiaries lacking
both farming equipment and expertise. - AFP
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