By Jacob Mafume
AN unrelenting inflationary environment has characterised our economy for over three months, the surge of prices has become one of the biggest challenges in the lives of Zimbabweans.
Any attempt to mitigate the effects of the scourge or combat inflation must normally be applauded; ZANUPF however brings a new twist to the whole matrix.
The ZANUPF politburo resolution on inflation is rather scary than it can be reason for celebration.
In lightning speed fear takes the citizen back to 2007 when the effects of price controls almost turned major supermarkets into ghost houses.
Back then just like now like it was failure to manage the hygiene of the economy which had created hyperinflationary conditions.
In response to the prices then, the ZANUPF government through the National Incomes and Pricing Commission which was then headed by Mr Goodwill Masimirembwa embarked on a misguided crackdown on retailers.
As a result of this campaign, shelves were empty and the black market flourished until the era of the involuntary dollarization.
The People’s Democratic Party is therefore shocked by the decision to take a similar route which just a decade ago proved catastrophic.
ZANUPF must not forget that inflation is just but a manifestation of flouted fundamentals and structural challenges.
In this case inflation is a result of forex premiums on all imported goods. We find the deliberate misunderstanding of basic economics by this government extremely regrettable.
Chinamasa of all the people knows that the multiple exchange rates crossing the bond notes, RTGS transfers, Ecocash and the US dollars results in price hikes.
The price of the United States dollars is the major driver of inflation coupled with government’s ill informed decision to introduce the bond notes which for all interns and purposes was meant to monetise the government raids at the RBZ however causing serious distortions in the market.
We therefore find the noise around sabotage and the introduction of a price control crack team shocking, this only serves to dig the economy further down a bottomless abyss, the guy ignorantly referred to as ED and his team will not be able to dig us out of it.
Basic modern economics entails addressing the fundamentals as opposed to the use of coercion and intimidation tactics. This is especially contrary to the language that the administration pretended to adopt after the swearing in of Mnangagwa, it however suits well their command thrust.
We urge the government to stop tinkering with the deck while the titanic is sinking.
To address the inflationary crisis the following must be done.
- Demonetise the bond note to reduce exchange distortions in the economy as well as dealing with the cyclical driving out of good money.
- Ensure the patronage premiums of corruption at the borders, these are increasing the cost of importing.
- Deal with the general fiscal hygiene which is the root cause of the crisis.
- The government must pay back the money they stole from NOSTRO accounts kept at the RBZ, these accounts are key for smooth processing of external transactions.
- A holistic monetary reformation thrust must be adopted which includes the ring fencing of accounts with a view to join the rand monetary union in the future.
Together Another Zimbabwe is Possible
Jacob Mafume is PDP Spokesperson