Price increases greet Gono's monetary policy statement

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By Torby Chimhashu

THE stage is set for fresh confrontation between the Zimbabwe government and businesses following a wave of price increases effected Tuesday, just hours after the central bank unveiled its Monetary Policy Statement (MPS).

President Robert Mugabe has warned that his government will seize firms found charging prices outside "what was agreed on".

Arriving from the just ended United Nations summit in New York held last week, a bubbly Mugabe told supporters at the Harare International Airport that he won't compromise on prices.

"We are warning companies to examine themselves and charge the prices we have set. If they do not comply with our set prices we will take them over," Mugabe told supporters at the airport.

"We will seize the companies and take over their operations."

But companies and parastatals reeling from government imposed price controls moved ahead with a fresh round of upward adjustments.

First to introduce steep water tariffs was the bungling Zimbabwe National Water Authority (ZINWA) which pushed upwards the rates from $3 596, 20 per cubic metre to $23 765,63 backdated to August .

The water utility also announced that residents in low-density suburbs pay $47
530,63 per cubic metre, which is the full cost of treating the cubic metre.

The increases came a day after the Reserve Bank of Zimbabwe Governor Gideon Gono set aside $14,5 trillion for water and sewer reticulation following widespread outbreaks of cholera and massive diarrhoea reported in high density suburbs plagued by water cuts.

Gono said: "We cannot sit and watch while our people die from diseases such as cholera and dysentery which have been reported in the high density areas. Your Governor can not and will not allow the suffering of people. Water is life and everything depends on it.

"The problem that has been created, I don't know for what reasons, requires the Governor and his team at the central bank to respond with speed. This money is our response to this crisis which is now an emergency.”

Zinwa has been roundly blamed for the water crisis gripping most urban areas especially Harare and Bulawayo. Bulawayo is worst hit.

Since taking over the water management and other works related assignments from the local authorities, Zinwa has been plunged the country into a serious water crisis.

Prices of basic commodities also shot through the roof as supplies trickled in at major supermarkets around the country.

A 2 litres bottle of Mazowe which Gono promised would be on the shelves before the end of the month now costs $1 million dollars from $420 000 while powdered washing detergents are pegged at $800 000 for 500g. The price of washing soap jumped from $450 000 per bar to $1 million.

A kilogramme of beef has skyrocketed to $1, 2 million in the high density suburbs while the same weight is costing $1 million for pork.

Analysts said the heavy increases in the prices of basic commodities is hardly surprising given the government crackdown on business and other related problems such as foreign currency shortages and intermittent power outages.

Also on Tuesday, the thriving foreign currency parallel market recorded high rates for the elusive United States dollar and other currencies.

The local unit opened the day pegged between 500 000 and 520 000 against the greenback on the black market, depending on volumes pushed.

Dealers said it was in stark contrast to last week where the US Dollar was stabilised at 420 000.

The Zimbabwe Electricity Supply Authority (ZESA) has also pushed tariffs upwards in a bid to raise US$41 million to retire its ballooning debt.

Analysts have warned that Gono's efforts to introduce a new currency could be further scuttled by new levels of inflation expected from the price increases and the foreign currency crisis.

Zimbabwe is in its straight ninth year of economic recession which is punctuated by poverty levels of more than 70%, collapsed currency, shrinking production and inflation sitting at 6592%.

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