RESERVE Bank governor Dr John Mangudya has warned pharmacies that are receiving support from the foreign exchange auction trading system against pegging their prices using the parallel market exchange rate, saying such practices destabilise the economy.
Out of the US$2 billion dispensed by the Central Bank
through the auction so far, nearly US$132 million has gone towards supporting
medical and chemicals imports.
In a speech read on his behalf at the Retail Pharmacists
Association Conference in Harare yesterday, Dr Mangudya said the Bank will
ensure uninterrupted provision of foreign currency to the pharmaceutical
industry.
Since the launch of the Dutch Foreign Exchange System in
June 2020, the Bank has dispensed about US$2 billion to various sectors of the
economy,” he said.
“Of this, about 6,5 percent or US$132 million was disbursed
toward medical and chemicals imports; thus illustrating the Bank’s commitment
to sustaining this important sector. The improved availability of foreign
currency has resulted in increased capacity utilisation by industry from 36
percent in 2019 to 47 percent in 2020 and further to a projected 61 percent in
2021.
“It is, however, worrisome that despite the support
measures, some economic agents, including retail pharmaceuticals firms, have
continued to benchmark and index their prices to the unjustified parallel
exchange rate.
“It has been noted that the practice is being deliberately
done as a way of discouraging customers from using the domestic currency.
“This is taking advantage of the inelastic demand for
health care, including pharmaceuticals. Inelastic demand means the public pays
whatever the price for health care, which in the process compromises exchange
rate dynamics and affordability of drugs by the majority of the populace.”
Dr Mangudya said the widening foreign currency premium on
the informal market was not linked to any economic fundamentals.
“This errant behaviour of price indexation to the parallel
exchange rate, especially by the beneficiaries of the auction system, has
inadvertently contributed to the widening of the parallel exchange rate premium
with destabilising effects on prices and the whole economy at large.
“The Bank, therefore, calls upon business and the retail
pharmaceutical industry in particular, to act responsibly in their pricing
methods in order to consolidate and sustain the stability gains that we have
already achieved.”
He said the pharmaceutical industry was playing an
important role in the country’s fight against the Covid-19 pandemic.
The conference was held under the theme: “Evolution of
Community Pharmacy Practice Towards Universal
Health Coverage by 2030”. Sunday Mail
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