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Gono, govt clash over price blitz
Dumisani Muleya, The Zimbabwe Independent
July 06, 2007

http://allafrica.com/stories/200707060714.html

Reserve Bank governor Gideon Gono has clashed with government over its crackdown on shops and supermarkets in a doomed bid to curb spiralling inflation. The row has exposed cracks within government over the arbitrary policy - which prominent lawyers this week described as illegal because it has not been gazetted - as the economy continues to crumble all around. Inflation is officially 4 500%, although economists say it is probably double that. The Zanu PF politburo yesterday discussed the price blitz, with some officials defending it while others effectively said it was suicidal. This has left authorities facing a climb down and the difficult task of cleaning up their policy mess. While Gono and his technocrats are struggling to revive the economy, President Robert Muagbe, ministers and Zanu PF officials are pushing a populist line targeted at grabbing votes in next year's joint parliamentary and presidential elections. This has put Gono on a collision course with Mugabe and his officials who are desperate to win the crucial polls.

Gono on Tuesday angrily wrote to Minister Without Portfolio Elliot Manyika, who was acting chair of the Cabinet Taskforce on Price Monitoring and Stabilisation, distancing himself from the blitz and the resultant looting. Gono told Manyika that the clampdown was futile because it would not reduce inflation. He said a "holistic package of measures that would uplift the general supply of goods and services in the economy" was needed. "I write to make recommendations on the ongoing efforts meant to stabilise prices in the economy," Gono said in his letter dated July 3, titled "Prices Reduction Crack Team Programme". "It is our strongest conviction that only through a holistic framework can we stabilise prices, without inducing shortages in the market." Gono's two-page letter, copied to Chief Secretary to the President and Cabinet Dr Misheck Sibanda and Minister of Policy Implementation Webster Shamu, said government has been ignoring advice on how best to reduce inflation since 2003.

Gono attached a catalogue of policy proposals - which include the need for fiscal discipline, cutting down of government expenditure and reduction of the budget deficit - he had offered over the years, saying the recommendations were either half-heartedly accepted or simply ignored. Gono has been blamed for quasi-fiscal activities, printing money on a large scale to fund state operations and thus fuelling inflation, but he has said he was acting under orders from the top. The letter is understood to have angered government ministers who think Gono wants to sabotage their price reduction campaign. Gono himself is said to have been riled by the crackdown which he sees as inherently irrational. Mugabe and Vice-President Joseph Msika have publicly endorsed the current price onslaught. Manyika, a Zanu PF commissar, and Industry and International Trade minister Obert Mpofu, chairman of the cabinet taskforce, have been at the forefront of the campaign.

Sources said Gono last week boycotted a key meeting convened by State Security minister Didymus Mutasa to discuss the issue in protest against the chaotic blitz. It is said Gono resisted efforts by Shamu and Small to Medium Scale Enterprises Development minister Sithembiso Nyoni, a member of the cabinet taskforce on prices, to get him to attend the meeting. The meeting, chaired by Mutasa, who is the chair of the Joint Operations Command that combines security service chiefs from the army, intelligence, prisons and police, went ahead without him. After the meeting, sources said, Gono wrote to Mutasa dissociating himself from the crackdown. It is said Gono tried to avoid a fallout with Mugabe over the issue by explaining to him the economic pitfalls of the blitz. A top government official said yesterday technocrats have failed to make politicians understand their demagoguery cannot be a substitute for policy. The prices campaign has now degenerated into random and rowdy looting, leaving shops empty and consumers stranded. As captains of industry and commerce warned, basic commodities have vanished from the shelves of most shops due to the government order for retailers to cut prices by half. Manufacturers cannot recover their costs of production if government controls prices and will therefore close down operations, a trend that is already evident.

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