FINANCE and Economic Development Minister Professor Mthuli
Ncube says the wave of price increases being experienced on the market and wild
parallel market exchange rates have no economic justification as Government has
successfully managed to stabilise fundamental fiscal elements that previously
fuelled inflation.
Addressing industry and commerce executives during the
International Business Conference (IBC) yesterday, Prof Ncube decried the
level of indiscipline in the market, which he said thrives on speculative
sentiments.
Vice President Constantino Chiwenga also attended the
conference and, in his remarks, warned speculators (read story Page 2). Prof
Ncube decried unethical behaviour and bad economic practices which he said were
creating a negative economic environment for the whole country.
“We are doing very well on the fiscal front . . .
Government is solvent, we are running surpluses and we have been doing average
surpluses of $100 million since September last year when we came in. In January
we had surplus of $102 million, February $85,5 million as we had to take into
account cushioning of civil servants. In March, our surplus doubled to be just
about $200 million,” Prof Ncube said. He said Government finances were sound
and money supply was not growing.
“Where is pressure on the exchange rate coming from? Before
we knew that it came from the fiscus, we were monetising the fiscal deficit and
then money supply would grow, but now where is the pressure coming from?
Clearly it is speculation and that speculation is not a good idea, we know who
is driving it.
“Our job as Government is to make sure that our
fundamentals that determine value of a currency are still strong.
“We are not careless in terms of how we spend and we make
sure the value of the currency is preserved, but you (businesses) should meet
us halfway,” said Prof Ncube.
He said Government was forging ahead with implementation of
painful but necessary austerity measures as building blocks towards desired
prosperity.
Minister Ncube assured the nation that the period of
austerity will be short and certainly not exceed one year as the positive
fruits of belt tightening were already being realised.
“We need to go through some period of austerity as we build
towards prosperity. But quite clearly you can’t do austerity for three years,
that’s bad, do it one year and move on, he said.
Prof Ncube pleaded with businesses to be patient and desist
from wanton price increases and profiteering as Government puts in place the
building blocks.
“Please, it is bad economics, very bad economics where you
tie price increases directly to the exchange rate. Good economics says tie
prices around a consumption basket, you don’t earn your salary to go and buy US
dollars. So, inflation thinking should be hinged around consumption basket and
not US dollars,” he said.
“Above all, make use of this interbank bank market, we have
created it for you.”
Minister Ncube said key pillars towards the desired
transformation included among others infrastructure development, strengthened
governance, improved democratic space, improved social services, strengthening
of public institutions, improved ease of doing business climate and fighting
corruption .
Prof Ncube said the Transitional Stabilisation Programme
(TSP) was a short term blue-print that has a mandate to stabilise economic
fundamentals before its long term successor policy guidelines take shape.
He said going forward the upper middle class vision targets
per capita income level of US$4 500 by 2030 and a long term Gross Domestic
Product of US$65 billion from the current estimate of $25 billion. Herald
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