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Mangudya says subsidies to stay despite financial haemorrhage

05/05/2017 00:00:00
by Business Reporter
 
RBZ governor John Mangudya
 
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RESERVE Bank of Zimbabwe (RBZ) governor, John Mangudya says the country shall maintain subsidies on grain and wheat which government critics say were being used by Zanu PF linked individuals to plunder national coffers.

Mangudya was speaking at a recent policy dialogue forum where he insisted any scrapping of subsidies will trigger a hike in the prices of maize, creating a security headache for the country.

The current maize producer price is $390 per tonne while the import price stands at around $280 - $300 per tonne.

Mangudya said government’s command agriculture programme has resulted a bumper harvest with GMB now buying the maize at $390 per tonne.

“We have got plenty of grain and government is going to pay for grain as it is delivered $390 per tonne but selling to millers at import price so that prices don’t go up. Very good price!” Mangudya said.

“People say that it’s subsidy; yes, there is the subsidy element there. The difference between $390 and the import buying price is about $80 to $90 dollars and that’s what we need to do as an economy.”

Most of those contracted to produce grain under Command Agriculture are top government officials and high ranking individuals within the country’s security organs.

Mangudya also defended the 5 percent subsidy given as incentives to local exporters through the bond note facility.

“When you look at wheat; its $500 per tonne, import price of wheat is about 340 to 360 dollars. So, there is almost 50 percent subsidy in wheat, 30 percent subsidy in maize.

“Then people talk about 5 percent, that ‘no, it’s is criminal’. Then I say, 'hey come on, check your arithmetics'.

“That’s growth, definitely in terms of agriculture, we need to continue what we have been doing.”

However, the price discrepancies have created a case where connected individuals deliver grain and are paid $390 per tonne.

The same individuals would return to buy the same maize at GMB for $300, only to return later to sell it again at $390 again, making a killing.

GMB has been found to be lacking in systems to curb the rot.

In past interviews with NewZimbabwe.com, former finance minister Tendai Biti said the practice was rampant within the Zanu PF led government.

“That’s why when some of us were still in government, we abolished the issue of the producer price because it was an instrument of arbitrage,” Biti said.



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“Number two, we deregulated maize so that the farmer can sell to anyone.

“When we left Zanu PF brought back the monopoly again because the monopoly guarantees GMB arbitrage.”


 
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