Prices of goods in Zimbabwe will come down

By Staff reporter | 02 Jul 2019 at 17:46hrs
Mthuli Ncube
PRESIDENT Emmerson Mnangagwa's under-pressure government says it is confident that the sky-high prices of basic goods that have made the lives of ordinary citizens miserable over the past few months will come down in time as its new policy measures take effect.

Appearing in Parliament yesterday - together with Finance minister Mthuli Ncube and Treasury permanent secretary George Guvamatanga - Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said although prices were likely to remain high in the short term, as shops were still clearing stocks that they bought using steep black market rates, they would come down in time.

At the same time, Mangudya also told fearful legislators that Zimbabwe was unlikely to experience the debilitating hyper-inflation that hit the country in 2008, and which destroyed lives, savings and businesses - saying the government's new policies would mitigate against this.

"There has been no pressure from the fiscus ... so there will be no runaway inflation," he said, adding that the central bank had also raised interest rates "to squeeze the market in a short period of time in order to deal with prices".

Mangudya also revealed that the government would print $400 million worth of bond notes for circulation in the market, following its recent termination of the multiple currency system that had been in use in the country since 2009.

This came as the once thriving foreign currency black market has remained subdued over the past few days, following the surprise recent return of the Zimbabwe dollar.

The RBZ boss said the money would fill the gap created by the termination of the public use of United States dollars, which had been the main currency used in daily trading over the past decade.

"With Statutory Instrument (SI) 142/2019 … we have now removed the usage of US dollars in the economy ... There is thus a gap that we have created in terms of paper money.

"The $400 million dollars … will be on a drip-feed basis and as we print new money, that money will be replacing the old money," Mangudya said.

On his part, Ncube said the use of the US dollar had contributed to the destruction of local industries, as the coveted greenback affected industry competitiveness.

"We can now control our competitiveness with the new measures," he said, adding that fears of a recurrence of the economic horrors of 2008 were misplaced as Mnangagwa's government was disciplined.

"Now, we have fiscal discipline. The policies (between 2008 and now) are far different. The policies of 2008 are not being repeated," he said.

The government ended the use of multiple currencies in the country last Monday, a system it adopted in 2009 following debilitating hyper-inflation which devoured the Zimbabwe dollar and decimated both businesses and the lives of ordinary people.

The multiple currency system, which had the US dollar as the main currency in circulation, was credited with stabilising the economy and bringing down inflation, which has since shot up to nearly 100 percent.

Zimbabwe is currently in the grip of a ginormous economic crisis which has seen the prices of basic goods, fuel and medicines rising sharply.

As a measure of how things had recently fallen apart in the country, last month the government announced that official inflation was now at 97,85 percent - the highest in the country since Zimbabwe scrapped the then worthless local dollar.

Mangudya also told Parliament yesterday that individuals and companies currently held about $1,3 billion in foreign currency accounts.

He also told lawmakers that the central bank had traded up to $525 million on the newly-launched forex interbank market.

Ncube also once again touted the fact that the government had, for the first time in decades, run up a budget surplus - instead of the budget deficits of the Mugabe years.

However, the Budget and Finance portfolio committee took exception to the issue of new policies being announced with neither adequate consultations and communication with citizens.

In response, Ncube agreed that his ministry needed to improve on the dissemination of information with regards to all new policies.

"Yes, I agree that we could do a better job on the information dissemination front, especially translating this information in our indigenous language, as well as into the various corners of Zimbabwe," he said.

He added that his ministry was in the process of hiring a communications expert in this regard, to help manage the ministry's communication strategies.

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