Editorial Comment: Govt must dump US$, bond note 1: 1 fallacy

BY hiking the prices of fuel by a massive 150% at the weekend, President Emmerson Mnangagwa was subtly admitting that the surrogate currency is not and will not trade at par with the greenback, although they insist and would like us to believe the impossible.

Editorial Comment

It is not in dispute that in real US dollar terms, our fuel was cheaper in the Sadc region in real US$ terms, but Mnangagwa and team chose to subsidise fuel, at a huge cost to the economy, just to massage their egos and pride of having a surrogate currency trading at the same level as the greenback.

While it was inevitable that the price of fuel would go up, considering the unsustainable price distortions on the market, it is the timing of the increases that has raised more questions over government’s commitment to the social contract as the recent hike will certainly have a domino effect on all sectors of the economy, and resultantly hurting the poor more.

Just last week, government offered a 10% salary hike to civil servants, which translates to about $41 for the least paid public worker. Government ignored pleas by its workers that they have been virtually incapacitated since October when a wave of price hikes hit the country following introduction of the Transitional Stabilisation Programme by Finance minister Mthuli Ncube.

The workers rejected the 10% offer and while negotiations were still midway, Mnangagwa, whose government extended the olive branch with the right hand, snatched away the same offer with his left hand – leaving civil servants and the generality of the populace poorer than before.

We believe it was cruel and insensitive for Mnangagwa to hike fuel prices before cushioning workers against the harsh economic environment.

The steep rise in prices of fuel will definitely trigger a fresh wave of price hikes, further eroding the incomes of the ordinary person already struggling to survive.

Public transport costs have already gone up, further pushing the citizens deeper into poverty.

The President should be realistic and honest. This business of throwing doses of glibs and rhetoric on restive government workers will not take him anywhere. It will likely take him down the cliff if the current siege mood within the working public in general is anything to go by.

There was need to cushion government workers first before the hike was announced. Secondly, announcing a price hike that follows the US$ parallel market rate should have been followed by a public admission that the US$ and bond note are not at par.

Without the admission and corresponding remedies, the country will move in circles. What if the US$ parallel market rate skyrockets today? Is he is going to hike the fuel prices again? Government should move away from the 1:1 fallacy and face reality.

Being honest and pragmatic is all what is needed for him to solve the country’s problems. Failure to do so, the President is creating fertile ground for instability as suffering people will soon reach breaking point and not be able to bottle their frustrations.

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