Murerwa wants stop to price controls

Murerwa wants stop to price controls

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By Staff Reporter

ZIMBABWE'S Finance Minister Herbert Murerwa has called for the scrapping of state-administered price controls, launched in 2003 to rein in galloping inflation.

"We should move away from price controls. They do not help. It is some of these policies that are creating additional distortions," Murerwa said in submissions to a parliamentary committee on Monday.

"We are in a globalised village. There is no country that tinkers with this kind of thing."

The Zimbabwean economy, which has shrunk by 30% in the past four years, has been battling hyperinflation and critical foreign currency shortages.
The annual inflation rate soared to 254.8% at the end of July, up from 164.3% in June, according to official statistics.

It has been climbing upwards since 2000 when it stood at 55.9%, rising to 71% a year later. It reached 133.2% in 2002 before it shot to a record 622% in 2004.
Murerwa said he would set up a special committee to examine the underlying cause of price hikes.

However, the Consumer Council of Zimbabwe warned that lifting price controls now could be disastrous.
"We are still concerned ... that in the current economic circumstances where we have witnessed relentless increases in prices of basic goods and services," spokesperson Tonderai Mukeredzi said.

"If prices are left to the free market dictates we will have serious problems because consumers will not be protected," he added.

Wellington Chibebe, secretary general of the influential Zimbabwe Congress of Trade Unions, said he favoured a middle path.

"In a normal democracy, price control kills business while on the other hand super profits destroy the social fabric.

"What is needed is price management where we have prices by negotiation."
Adding to the woes of Zimbabwe's tottering economy are consecutive years of drought and a land reform program launched in 2000 in which some 4 000 white-owned commercial farms were seized and redistributed to blacks.

The latter has punched a gaping hole in agricultural production, which once accounted for 40% of the economy, with most of the new beneficiaries lacking both farming equipment and expertise - Reuters
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