On Tuesday, the Ministry of Finance issued a statement expressing concern over the resurgence of “speculative activities” that have given rise to significant price increases in the economy.
Fuel, particularly diesel, was one of the commodities cited as examples. Other cases include fast-moving consumer goods and education.
Treasury is convinced that the shortage of fuel is a result of market manipulation and abuse of liberalisation for the purpose of effecting changes in the price of the commodity and reassured the nation that government was working on a redress.
“I would like to assure the nation that the ministry together with relevant ministries is working on corrective measures to rectify and normalise the situation,” Finance minister Tendai Biti said in the statement.
Furthermore, Biti said the ministry was equally concerned with the behaviour of a few segments of our business community, who were still engaged in speculative activities similar to those that obtained prior to the adoption of the multiple currency system.
We commend him as we also believe that this is not only counter-productive, but also undermining government’s collective efforts in the rebuilding of this country.
The tone of the statement is not exactly fatalist and not exactly optimistic. In fact, the underlying message is that Treasury’s toolbox doesn’t have the kind of spanner needed to fix the loose nuts.
If it had, then it certainly would do more than make a moral appeal. Moral suasion usually expresses powerlessness or helplessness.
But one can sympathise with them because controls are an abomination under the present liberalised environment.
It has often been argued that the current economic stability was brought about by liberalisation, especially “dollarisation”.
Whereas there can be some debate about this assertion, there is certainly no debate that Zimbabwe’s recovery is under threat from some nefarious force, a force more devastating than purported sanctions, liquidity squeeze or the much-touted country risk.
It is some kind of overgrown psycho-pathological challenge brought forward from the Zimbabwe dollar era.
It accentuates itself in arbitrary price increases without regard for the stability of the currency in use. It also finds expression in overly high margins and other rent-seeking behaviours.
Quite sad, it appears even formal businesses still seek opportunities for arbitrage just like money vendors.
Treasury has clearly admitted that this psycho-pathological complex is a threat to sustained recovery.
But it is in a quandary: to continue with moral suasion, which doesn’t work, or to resort to controls, which would negate the basic tenets of liberalisation and disrupt the momentum of recovery, turning the clock back.
It is easy to say “corrective measures” are being sought out because it’s a statement stating a policy goal.
But it’s a different ball-game altogether to achieve results with very limited options.
There is no clue at this point how Treasury hopes to solve this puzzle, but what is apparent is that controls are not an option.
Hence, the country is likely to remain trapped and ensnared in this “catch-22” situation.