By UK Correspondent
THE government has expressed concern over spiralling prices of basic commodities and established a committee to “investigate and monitor” as retailers make adjustments in response to the fall in value of the Zimbabwe dollar.
The local currency has lost nearly half its value since last year despite various measures introduced by the Zimbabwe Reserve Bank (RBZ) to stem the slide including gold coins and, lately, gold backed digital coins.
Although the RBZ’s auction rate stood at ZWD1125,00 to the US dollar Tuesday, the more widely used black market rate was more than double at between ZWD2,500 and ZWD2,700.
A picture showing the retail cost of a lotion which topped ZWD43,000 trended on social media Tuesday with users expressing shock at the spiral in prices of basic commodities against eroding incomes.
Addressing a post-cabinet press conference in the evening, Information Minister Monica Mutsvangwa said a cabinet committee has been established to probe the price increases.
“Cabinet discussed at length the price and basic food supply situation following a brief on the matter by the Minister of Industry and Commerce, Hon. Dr. Sekai Irene Nzenza,” said Mutsvangwa in her statement.
“The nation is being informed that Cabinet is concerned by the spiralling prices of the 14 basic goods especially bread, flour, cooking oil and mealie-meal.
“The Minister of Industry and Commerce is already engaging the concerned stakeholders including manufacturers, wholesalers, retailers and other associations on the matter.”
She added; “Given the urgency of the matter, Cabinet has set up a Committee to quickly investigate, monitor and make appropriate recommendations to Cabinet with a view to bringing sanity to the situation.
“The Committee will comprise the following Ministers: Industry and Commerce; Finance and Economic Development; and Information Communication Technology, Postal and Courier Services.
“Meanwhile, the Minister of Industry and Commerce will issue an appropriate statement on the matter. Cabinet wishes to assure the nation that corrective measures will be taken in order to protect the transacting public.”
The central bank is hoping the newly introduced digital tokens will help stem price pressures but analysts are not convinced.
They say the measures do not address the root cause of the currency slide which is the RBZ printing money for government spending which is expected to increase due to this year’s elections.
“They are printing — we are in an election period,” local economist Tinashe Murapata told the UK based Financial Times. “Unfortunately, (the country’s) revenues are just not enough. We have an insatiable expenditure. It will take deep-seated institutional reforms to solve it.”
Zimbabwe is a special country ! pic.twitter.com/dMrE9ma0cl
— Dr Walter Mzembi (@waltermzembi) May 9, 2023
The International Monetary Fund (IMF) has also downplayed the effectiveness of the digital tokens, urging Harare to use conventional means to address the country’s currency crisis.
“A careful assessment should be conducted to ensure the benefits from this measure outweigh the costs and potential risks including, for instance, macroeconomic and financial stability risks, legal and operational risks, governance risks, cost of forgone FX reserves,” an IMF spokesperson told Bloomberg news in an emailed response to questions.
Opposition politician and former finance minister Tendai Biti also said the government’s currency measures and general economic policies had proved to be a “disaster”.
“Local manufacturers are openly rejecting the RTGS (real time gross settlement), proving once more that an economy will never be run by statutory instruments. There is an urgent need to address the failed de-dollarisation experiment. What a disaster,” Biti commented on Twitter.
“Government has introduced a cocktail of measures to stabilise the local currency including gold coins but without success.
“Zimbabwe has remained trapped by multiple crises – economic, political and social.
“The decay of infrastructure and the collapse of public services, the mismanagement of the exchange rate, the closure of political space, point to the fact that this lot is the worst regime in the history of governments”.