What next for Zimbabwe’s govt after fuel price hike backfires?

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Zimbabweans have reacted with anger and frustration to last week’s announcement of a fuel price hike by President Emmerson Mnangagwa.

In a televised address last Saturday, Mnangagwa said prices of petrol and diesel would more than double to tackle a shortfall caused by increased demand and “rampant” illegal trading.

Petrol prices have been raised from $1.24 a litre to $3.31 (2.89 euros) and diesel from $1.36 a litre to $3.11.

The president’s announcement came after fuel shortages which began in October last year worsened in recent weeks with motorists sometimes spending nights in fuel pump queues that stretch for kilometres.

Reactions to fuel hike

Citizens, activists and opposition political parties blasted the government for being insensitive to the plight of the common man.

The Zimbabwe Congress of Trade Unions called for a three-day stayaway and shutdown strike that has paralysed banks, schools, businesses and the stock market in the capital Harare and the second city of Bulawayo.

The country’s labour minister, Sekai Nzenza announced on Monday that public workers will be given a cost of living allowance of between 5 percent and 23 percent of their monthly salary from January to March.

The president himself, flew out of the country on Sunday for a five-nation tour of Eastern Europe that will end at the World Economic Forum in Davos, Switzerland.

We talked to Kudzanai Sharara, a financial journalist in Harare, to share his assessment of why the government’s intervention seems to have backfired.

What should be done to resolve the ongoing fuel crisis, considering that the price hike has backfired?

‘‘I think what we need now is some kind of a social contract, where government, labor and employers sit down and deliberate on issues. For example, if they have done this with a few of them and say that look guys this is what we want to do as government, what do you think? And then business as well as labor will probably point out and find tune the laws’‘.

Is a new currency as announced by the finance minister last week, feasible and necessary?

‘’Mostly it is not about the currency that is used. We can take the strongest currency in the world. We can take the Japanese yen, which is seen by many as a safe haven…you can take the US dollar, but it will still collapse as long as we do not have the proper fundamentals on the ground. We have a huge budget deficit, which the minister is working on through this austerity measures. We have got a huge trade deficit which also needs to be looked at. So we have got so many challenges that we have and fundamentals that we really need to sort out first before we introduce our own currency.’‘