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Weekly
economic bulletin
Crisis
in Zimbabwe Coalition
August 17, 2007
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1.0 Summary of Economic
highlights
a) Government splashes
1 million in defence of price controls
At the time
when the country's economy is on its knees due to the foreign
currency crisis, the Zimbabwean government through the Reserve Bank
of Zimbabwe (RBZ) splashed US$1 million on New African magazine,
in a bid by the government to spruce its battered image.
The magazines are being
distributed at the Zambian SADC heads of state and government meeting
which will end today. Analysts have maintained that, this will increase
the inflationary pressures on the already stressed economy.
The role of the government,
the world over includes the effective allocation and distribution
of scarce resources to serve the best interests of the citizenry.
However, the state's actions are a clear indication that it
has lost its mandate to serve the people of Zimbabwe, but rather,
the state has been converted into a platform for personal appeasement
and aggrandizement.
b) Reserve Bank of Zimbabwe
(RBZ) and the Black Market
Information filtering
from the Confederation of Zimbabwe Industry this week is that the
Reserve Bank of Zimbabwe has been at the centre of fueling inflation
through its extra legal activities of procuring foreign currency
from the black market.
In the month
of July 2007, the RBZ sourced US$ 100 million from the illegal market
in its bid to procure and level electricity bills this led to the
dollar crushing from USD 1 to USD70 000 to USD1 to ZWD 190 000 in
two weeks, an unprecedented 61.11% depreciation of the domestic
currency. This triggered a spiral of price increases in the official
market as the cost of the USD has a direct effect on the price of
fuel in the official markets. The increase in the fuel price had
a domino effect on the prices of the economic goods and services,
which led to the increase virtually all prices.
Despite the glaring evidence
on the causes of the hyper-inflationary environment, which the country
is plunged into, the Zimbabwean government has the audacity to mislead
the nation of the causes of such an environment. The government's
scapegoat became the business community, which has been at the receiving
end of the state's hatred messages, after the declared warfare
on them.
It is therefore a misnomer
for the government to criminalize the business community and accusing
them of harboring regime change agenda through price hikes. It is
actually the government to blame through its undisciplined government
expenditure which has led to the current quagmire.
c) Government early signs
of retreat
This week, the government
of Zimbabwe 'reviewed' the price structure of basic
commodities in a bid to stimulate the supply side of the economy.
The supply had shrunk after the government ordered the business
community to slash its prices by 50%.
On the 25th
of June 2007, The Cabinet Taskforce on Price Monitoring and Stabilization
headed by the Minister of Industry and International Trade, Obert
Mpofu issued a 48 hour ultimatum to the business sectors merchandising
basic commodities, to slash their prices to those gazetted by the
taskforce. The price of Mazowe orange juice has been slashed from
ZWD 550 000 to Z$ 120 000. The price of Salt (2kg) has been reduced
from Z$160 000 to Z$86 000. Colgate tooth paste is now fixed at
Z$200 000 from Z$700 000 among others.
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