Economy in for bumpy ride as Zanu PF gropes in the dark

HARARE – Zimbabwe’s tottering economy is in for another bumpy ride in 2007 with analysts warning of yet another year in which political expedience and economic grandstanding rather than rational macroeconomic management will drive economic policy and planning.

The analysts spoke as the ruling Zanu PF party completed a two-day annual conference whose other key objective – in addition to extending President Robert Mugabe’s term by two years – was to figure out a plan to achieve a sustainable turnaround of the country’s economy. Among other recommendations, the party supporters resolved that the government should institute tougher measures to rein in a continuous rise in prices of goods and services.Zimbabwe currently has the highest rate of inflation, which was pegged at 1 098.8 percent in November.Zanu PF also recommended stiffer controls on thriving black markets for foreign currency and goods as well as measures to ensure the viability of the tourism and mining sectors.Analysts yesterday warned that a lot of pressure would be brought to bear on the Ministry of Finance and the Reserve Bank of Zimbabwe (RBZ) in 2007, a development expected to plunge the country deeper into economic problems.”We are now waiting with bated breath to see how far (RBZ governor Gideon) Gono will dance to the Zanu PF tune when he presents his monetary policy statement in January.We wait to see how much grandstanding will come out,” said a member of the Confederation of Zimbabwe Industries (CZI) who spoke on condition he was not named.The analysts said Zimbabweans should brace for more shortages of goods in the coming months as the government starts implementing the unworkable policies such as more stiffer price controls recommended by the party conference and which analysts said could only force producers to go underground.”There were a lot of vague statements made at the conference and it will be interesting to see how they will implement some of them,” said University of Zimbabwe business school lecturer Tony Hawkins.One of the concerns raised during the conference was the non-competitiveness of Zimbabwe ‘s tourism sector, a key foreign currency earner before the economic crisis began in 1999.In a move likely to further impinge on the fortunes of the country’s faltering tourism sector, some of the delegates felt that the country’s tourism products are over-priced.””The real issue here is that of a sub-economic exchange rate that is beginning to make our exporters uncompetitive,” said the CZI member.”What they should simply do to enhance the performance of the tourism industry and the many other exporters out there is that they must be prepared to devalue the Zimbabwe dollar,” said Hawkins.Another challenge for the Zimbabwean economy in 2007 will be how to balance the insatiable demand for foreign investment and the quest for “self-determination” in the utilisation and exploitation of the country’s natural resources.The conference endorsed Mugabe’s call for all foreign mining houses to reserve a 51 percent stake for indigenous black people.ZimOnlineAmong other recommendations, the party supporters resolved that the government should institute tougher measures to rein in a continuous rise in prices of goods and services.Zimbabwe currently has the highest rate of inflation, which was pegged at 1 098.8 percent in November.Zanu PF also recommended stiffer controls on thriving black markets for foreign currency and goods as well as measures to ensure the viability of the tourism and mining sectors.Analysts yesterday warned that a lot of pressure would be brought to bear on the Ministry of Finance and the Reserve Bank of Zimbabwe (RBZ) in 2007, a development expected to plunge the country deeper into economic problems.”We are now waiting with bated breath to see how far (RBZ governor Gideon) Gono will dance to the Zanu PF tune when he presents his monetary policy statement in January.We wait to see how much grandstanding will come out,” said a member of the Confederation of Zimbabwe Industries (CZI) who spoke on condition he was not named.The analysts said Zimbabweans should brace for more shortages of goods in the coming months as the government starts implementing the unworkable policies such as more stiffer price controls recommended by the party conference and which analysts said could only force producers to go underground.”There were a lot of vague statements made at the conference and it will be interesting to see how they will implement some of them,” said University of Zimbabwe business school lecturer Tony Hawkins.One of the concerns raised during the conference was the non-competitiveness of Zimbabwe ‘s tourism sector, a key foreign currency earner before the economic crisis began in 1999.In a move likely to further impinge on the fortunes of the country’s faltering tourism sector, some of the delegates felt that the country’s tourism products are over-priced.””The real issue here is that of a sub-economic exchange rate that is beginning to make our exporters uncompetitive,” said the CZI member.”What they should simply do to enhance the performance of the tourism industry and the many other exporters out there is that they must be prepared to devalue the Zimbabwe dollar,” said Hawkins. Another challenge for the Zimbabwean economy in 2007 will be how to balance the insatiable demand for foreign investment and the quest for “self-determination” in the utilisation and exploitation of the country’s natural resources.The conference endorsed Mugabe’s call for all foreign mining houses to reserve a 51 percent stake for indigenous black people.ZimOnline