Thursday, 5 October 2017


FINANCE and Economic Development Minister Patrick Chinamasa has opposed the introduction of price controls, telling lawmakers that the matter came up for discussion in Cabinet last week.

President Robert Mugabe’s government was rattled by a spike in prices of basic goods at the end of last month, as a worsening foreign currency crisis triggered fears of widespread shortages.

Mugabe promised tough action over the price increases, raising fears of price controls that his government introduced twice, with disastrous consequences, in 2001 and 2007.
Following a Cabinet meeting on September 27, government announced measures to end ‘market indiscipline’, including cracking down on black market currency traders and deploying price monitors in stores, but came short of regulating prices.

“What I want to say Mr. Speaker Sir, this happened in a discussion in Cabinet yesterday, I told Cabinet that I am opposed to the reintroduction of price controls; they will worsen and exacerbate the situation. We must handle it in a market-friendly way and I think it can be done,” Chinamasa said.

The minister was responding to a question from opposition lawmaker, Tapiwa Mashakada, on government’s response to accelerated price increases.

“The issues on what to do on prices which were hiked, is a matter that is going to be the responsibility of the Ministry of Industry and Commerce. They have started undertaking a survey, to determine two things: (firstly), is there a shortage of any of the essential commodities in the market? We do not think there is, but that should be highlighted. Secondly, to determine the price increases and the justification for increasing those prices. Only when we have scientific data can we justify taking any measures,” Chinamasa added.

“The problems that we know are fiscal deficit and this is not a matter that should be the responsibility of the Minister of Finance and Economic Development alone, it is our collective responsibility, here at Parliament.”

In 2001, after an economic crisis triggered by the disruption of commercial agriculture following government’s land redistribution drive which had begun a year earlier, government imposed price controls for basic goods and services such as groceries and transport. This triggered widespread shortages and drove inflation up.

Two years later, government relaxed the controls, introducing a Prices and Incomes Stabilisation Protocol where prices of crucial commodities and services would be negotiated under a Tripartite Negotiation Forum.

Price controls were to be re-introduced in June 2007, further fanning inflation, then running close to 7 000 percents, to reach astronomical levels of about 500 billion percent by December 2008. Financial gazette


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