Back to Index

Mugabe likely to ease price freeze
Tony Hawkins, Financial Times (UK)
August 09, 2007

Visit the special index page on price controls and shortages

http://www.ft.com/cms/s/567144f4-4699-11dc-a3be-0000779fd2ac.html

The Zimbabwe government is expected to announce a new price control policy next week that will substantially ease the existing blanket price freeze.

Six weeks ago President Robert Mugabe's government ordered businesses to cut prices by about 50 per cent and return to the price levels of June 18.

During the so-called "price blitz", some 7,500 businesspeople, industrialists, wholesalers and retailers have been arrested and fined, almost all of them pleading guilty to charges of contravening price controls. Some cases are still before the courts, including at least one challenging the validity of the price-control orders.

The new draft policy fixes the price of six or seven essential goods, including bread, sugar, cooking oil and fuel, that cannot be increased without ministerial approval.

The prices of another dozen or some items will be closely monitored and businesses will be required to seek official approval before making big price adjustments. The new policy is expected to set maximum mark-ups for importers, industry, wholesalers and retailers.

The authorities are unlikely to announce any relaxation of their hardline stance on prices until after Mr Mugabe's policy speech on Monday during the country's heroes' day celebrations.

Businesspeople say the proposed new policy marks a climbdown by the government, which last week said it would maintain strict price controls until the end of the year.

However, it is clear that the government is deeply divided over the price policy itself and how best to extricate itself from the impasse as companies warn of factory closures if the controls are not relaxed.

"Stocks are running out. The only way we can restock is by accessing the parallel foreign exchange market, which means much higher prices for products than the government will allow us to charge. It is deadlock," said one businessman.

In the parallel market, the Zimbabwe dollar, which recovered somewhat immediately after the price freeze was imposed, has weakened significantly in the past week to around Z$360,000 to Z$400,000 to £1. The official rate paid to exporters is Z$7,500 to the pound.

Please credit www.kubatana.net if you make use of material from this website. This work is licensed under a Creative Commons License unless stated otherwise.

TOP