Govt Ready To Take "Painful" Measures To Stop Price Hikes, Says ED
President Emmerson Mnangagwa said that the Government will “take all measures necessary” to protect the consumer and ensure price stability.
Writing in his weekly column for The Sunday Mail, Mnangagwa said the Government was aware some businesses were rejecting the local currency, abusing the foreign currency auction system and channelling goods to the informal market.
He said it didn’t make sense that the exchange rate has been highly unstable given the increased foreign currency inflows and use of the United States dollar in local transactions. He wrote:
The more than US$11 billion foreign exchange earned last year is the highest ever done by this economy, and is certainly far higher than in most economies in Sub-Saharan Africa, outside South Africa. Sadly, this has not translated into a stable exchange rate.
Mnangagwa noted that despite 80 percent of transactions being in foreign currency, with business allowed to retain most of it, the demand for foreign currency on the foreign currency auction has remained the same. He said:
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… Fourth and most exasperatingly, when 20 percent of our transactions were conducted in foreign currency, and 80 percent in local currency, the demand for foreign exchange at the auction averaged US$20 million weekly.
Today, when we find ourselves in an 80-20 percent reverse transaction equation in favour of foreign currency, the demand for foreign exchange at the same auction, and by the same Business now directly selling more wares in United States dollars, has risen to US$30 million a week! How does one explain such a paradox?
Mnangagwa warned businesses that the Government will not hesitate to punish those that break exchange control rules or are involved in money laundering. He said:
Above all, short-circuiting set rules and cutting corners in business attract very stiff sanctions.
Those who break our exchange control rules, or who money launder, will only have themselves to blame.
No one in business should doubt my Government’s resolve to correct blatant market failures, and to counteract and foil sinister moves to destabilise our economy.
Government’s responsibility is to protect the consumer, and to ensure stability in the market and inside the country.
We will take all measures necessary to ensure there is stability, including painful ones should that ever become necessary.
The Government established a committee led by the Ministry of Industry and Commerce to monitor and investigate the recent spate of price hikes.
The committee expects to submit its recommendations this week before they are considered by Cabinet for implementation.
The week before last, the Government removed duty on 11 selected imported basic grocery items and allowed shops and other Zimbabwean businesses to keep 100 percent of the foreign currency they get from sales.
The products that will be imported duty-free include maize meal, rice, milk, flour, sugar, salt, cooking oil, petroleum jelly, toothpaste, bath soap and washing powder.
More: Pindula News
