Finance and Economic Development Minister Mthuli Ncube said he will soon meet the business sector to understand the rationale behind recent price increases, threatening to reverse economic progress.
Most businesses responded to the government’s announcement of Statutory Instrument 127 of 2021 by hiking prices in both local and foreign currency.
Speaking on the sidelines of a meeting with miners in Bulawayo on Saturday, Minister Ncube said there was no justification for the price increases as the exchange rate has stabilised and inflation was going down. He said:
We will engage the private sector players to try to understand what the issues are that would have caused them to behave in this manner.
We thought we had reached some kind of equilibrium in terms of where the economy is, stabilising the exchange rate, and inflation heading downwards.
We will engage them to find out how we can work better together and also that they respond better to policymaking.
SI 127 of 2021 was introduced to put to an end the abuse of foreign currency that companies were sourcing from the Reserve Bank Foreign Currency Auction system.
Under the new rules, businesses can now be fined for issuing local currency receipt for goods purchased in foreign currency.
The law also bans pricing goods and services above the ruling exchange rate, pricing of goods only in foreign currency and using the money obtained from the auction for purposes other than what the supporting invoices on the bid stated.
Minister Ncube explained that the purpose of SI 127 of 2021 is to create a level playing to protect consumers and weed out speculators. He said:
The idea was very simple: those accessing foreign currency on the auctions are using it for the right purpose.
We intended to create a level playing field to protect the consumer to ensure compliance with the auction rate and that the auction-rate does not become a source of profit for speculators.
That was the idea. We wanted to bring sanity and compliance to the economy. But others have rather abused it and started increasing prices in United States Dollar (USD) terms and some even in Zimbabwe dollar terms.