Zimbabwe imposes price controls

HARARE – Zimbabwe has imposed price controls on several essential commodities and services in a bid to control runaway inflation, but analysts say this will have little impact on an economy already on its knees.

The southern African country is battling a deepening economic crisis which critics blame on President Robert Mugabe and which has driven inflation to the highest level in the world – an annual 782 per cent in February. Mugabe’s government has branded inflation and corruption as arch-enemies in its war to revive an economy which has shrunk by an estimated 40 per cent in the last seven years.Analysts say predictions that inflation could hit 1 000 per cent before mid-year and probably spark public unrest have left the government in a state of desperation which has seen it impose a new round of price controls on some goods and services.Zimbabwe’s state power utility ZESA, struggling to import electricity from neighbouring countries, was last month ordered to abandon a 570 per cent price increase after the central bank said it would fuel inflation beyond control.And this week, the government forced private doctors and hospitals to freeze a 240 per cent increase in medical fees, after recently ordering municipal authorities to stagger proposed huge rises in service charges over a 12-month period.In theory, Zimbabwe also has price controls on bread, milk, cooking oil, sugar, maize meal, fuel and bus fares, but in reality all are only available at many times the stipulated rates.Analysts say superficial price controls without a rise in production across the economy’s key agriculture, mining and manufacturing sectors would do little to reverse the country’s fortunes.Urban workers have borne the brunt of Zimbabwe’s economic crisis, marked by chronic shortages of food, fuel and foreign currency.Prices of basic commodities are rising almost daily while wages have remained largely stagnant.Leading economic consultant John Robertson also said price controls were only a temporary relief for consumers that would further distort Zimbabwe’s key indicators.”The economy is a victim of government policies under which property rights are either not recognised or are recognised grudgingly and are always under threat,” he said.Robertson said after Mugabe’s land seizure drive, a recent government proposal to pass an empowerment law for “indigenous” blacks to take up 51 per cent of shares in foreign mining firms had further damaged the country’s economic environment.”The only predictable thing is that you cannot predict what they will government will do next,” said Robertson.”You cannot have a sustainable economic recovery programme in an environment in which policies are not clear and consistent and in which the government is bullying and antagonising almost everyone in turns,” he added.-Nampa-ReutersMugabe’s government has branded inflation and corruption as arch-enemies in its war to revive an economy which has shrunk by an estimated 40 per cent in the last seven years.Analysts say predictions that inflation could hit 1 000 per cent before mid-year and probably spark public unrest have left the government in a state of desperation which has seen it impose a new round of price controls on some goods and services.Zimbabwe’s state power utility ZESA, struggling to import electricity from neighbouring countries, was last month ordered to abandon a 570 per cent price increase after the central bank said it would fuel inflation beyond control.And this week, the government forced private doctors and hospitals to freeze a 240 per cent increase in medical fees, after recently ordering municipal authorities to stagger proposed huge rises in service charges over a 12-month period.In theory, Zimbabwe also has price controls on bread, milk, cooking oil, sugar, maize meal, fuel and bus fares, but in reality all are only available at many times the stipulated rates.Analysts say superficial price controls without a rise in production across the economy’s key agriculture, mining and manufacturing sectors would do little to reverse the country’s fortunes.Urban workers have borne the brunt of Zimbabwe’s economic crisis, marked by chronic shortages of food, fuel and foreign currency.Prices of basic commodities are rising almost daily while wages have remained largely stagnant.Leading economic consultant John Robertson also said price controls were only a temporary relief for consumers that would further distort Zimbabwe’s key indicators.”The economy is a victim of government policies under which property rights are either not recognised or are recognised grudgingly and are always under threat,” he said.Robertson said after Mugabe’s land seizure drive, a recent government proposal to pass an empowerment law for “indigenous” blacks to take up 51 per cent of shares in foreign mining firms had further damaged the country’s economic environment.”The only predictable thing is that you cannot predict what they will government will do next,” said Robertson.”You cannot have a sustainable economic recovery programme in an environment in which policies are not clear and consistent and in which the government is bullying and antagonising almost everyone in turns,” he added.-Nampa-Reuters