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Inflation and monetary policy miracles
Media Monitoring Project Zimbabwe (MMPZ)
Extracted from Weekly Media Update 2004-03
Monday January 19th - Sunday January 25th 2004

The government-controlled media's enthusiasm to portray the sickly Zimbabwean economy as finally recovering from its myriad ailments found expression again this week through its narrow and simplistic interpretations of the effects the recently announced Reserve Bank of Zimbabwe's monetary policy has had on the country's economy. A decrease in inflation in December by 20.8 percent to 598.7 percent from the November rate of 619.5 percent was the latest economic indicator the government-controlled media used to support its arguments that the country's economy was on the mend.

Such fixation with the drop in inflation, as if that on its own was the key to success, without relating it holistically to other yet unresolved economic fundamentals, deprived audiences of the government media a greater insight into the complications the economy has to overcome if it is to recover. As a result these media devoted most of their time to praising the Central Bank governor, Gideon Gono, for inducing a drop in inflation instead of questioning whether government would abandon its disastrous policies, which have largely been blamed for the country's economic troubles, to complement the Reserve Bank of Zimbabwe's (RBZ) efforts. Although The Herald (22/1) half-heartedly touched on the subject, when it noted that "most economic analysts feel it could be still too soon to predict (the economic) recovery course as more focus will be on assessing government's credibility and consistency in its policy implementation", its slant was largely unquestioning as it sought to present the drop in inflation as an illustration of the effectiveness of the monetary policy.

Likewise, ZTV (20/01, 8pm) pointed out that the drop in inflation showed that the "economy has begun to respond positively to the monetary policy" adding (21/01, 8pm) that this was a clear indication the "country's economy is on the path to recovery." However, the private media disputed this. For instance, Studio 7(22/01) quoted economic commentator Tony Hawkins attributing the drop in inflation to the fact that prices of goods went up by "11 percent in December" compared to October and November last year when prices increased by over 32 percent. He described government- controlled media's attempts to directly link the RBZ's fiscal policy to the decline in inflation as "nonsense because figures were compiled before the monetary policy was even announced."

The Zimbabwe Independent (23/01) agreed, and observed that even the excitement over the drop in inflation rang hollow because the country's inflation was still "600 percent higher than our trading partners". In its comment, Gono's magic wand won't do the trick, the paper observed that all the positive publicity about Gono's strategies were likely to fizzle out because the country was not only failing to attract tourists and foreign investment, but also lacked badly needed financial support from key multilateral financial institutions. Said the paper: "He (Gono) may tinker at the margins" but "sooner or later he will have to face the hard facts that under the current regime a mismanaged economy, macro-economic distortions, corruption and shortages have become a way of life."

The Sunday Mirror (25/01) concurred. It pointed out that leading economists "remained pessimistic as to whether the problem of inflation has finally been averted" arguing that unless all stakeholders are fully committed and collaborate to complement current central bank efforts "the current 'honeymoon' would soon hit a brick wall". The Daily Mirror (21/01) and The Daily News (23/01) shared the same view. The government media would still not factor in these aspects in their reports. Besides, it also seemed to escape the professional logic of journalists from these media, as illustrated by The Herald (20/1) and ZBC (20/01, 8pm), that the availability of basic goods, although expensive, was a result of government abandoning price controls rather than the RBZ's monetary policy alone.

It was this obsession with promoting the monetary policy as a magic potion for the economic revival that saw ZBC (20/01, 8pm) claim that as a result of Gono's measures prices of commodities were tumbling. There was no attempt to look at other reasons outside the monetary policy that could have led to prices of some commodities going down. For example, it is common practice that retailers have clearance sales in January when business is usually low.

As a result of such simplistic attempts to sell the monetary policy, the government-controlled media also found themselves glossing over the effectiveness of the foreign currency auction system, which The Zimbabwe Independent reported as coming "under fire" from the same businesses that wanted it introduced because of its "unviable low" auction prices.

SW Radio Africa (20/01) also quoted Hawkins doubting the success of the auction system. Commenting on the firming of the local currency Hawkins said: " This is a very artificial situation because the level of the amount of transaction in the market is tiny. It's been about $2million an auction whereas a normal auction would have to be about $15 million an auction. So you can't read anything into these figures at this stage".

However, the government-controlled media unquestioningly allowed government to identify itself with Gono's attempts to revive the economy, ZBC (21/01, 8pm), The Herald (19/1&22/1) and Chronicle (23/1). The Herald (19/1) carried a public relations story in which ZANU PF tried to own Gono's financial sector clean-up, a move only questioned and interpreted in the private media as government's way of shoring up its waning support ahead of the 2005 parliamentary polls.

The Business Tribune (23/1) comment queried why Gono would only meet ZANU PF MPs and not legislators from the opposition because "...the MDC cannot be wished away as they represent a large chunk of voters." The Standard (25/1) dismissed ZANU PF's purported new crusade against graft as "cosmetic" meant "to hoodwink voters." But the government media steered clear of this angle. Instead, The Herald (19/1) attempted to summarily apportion blame for the country's financial mess to former RBZ governor Leonard Tsumba, whom it described as a "textbook economist", while glorifying Gono. The paper achieved this via a simplistic comparison of the performance of the two during their tenure at the central bank, concluding that, "Dr Gono has the full support of Government and President Mugabe." But it remained silent over whether Tsumba enjoyed the same support during his tenure.

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