ANOTHER significant fuel hike inside three months cannot be regarded as normal for any economy. In January, fuel prices shot up 150%, triggering spontaneous countrywide protests that left 17 dead when security services ruthlessly suppressed the demonstrations, with hundreds left nursing bullet wounds.
Although the new fuel price increases are at just about 50% for both petrol and diesel, and may not activate violent protests, they can in no way be dismissed as insignificant. This latest increase is a sure bad omen for both our economy and future of the nation.
Just to further highlight the gravity of the situation, money market rates reacted wildly to the move by the central bank to wean off oil marketing companies and relegate them to the largely ineffectual interbank market. Early yesterday, the interbank rate appeared to be steadfast at ZWL$3,48 to the US dollar, while parallel market rates were at ZWL$5,70. But by midday yesterday, the parallel market rate had shot to ZWL$6,35, while the interbank rate spiked to $4,7.
The fuel price increase, as it has happened from time immemorial, has a domino effect on all other prices, with basics such as bread and sugar already having been affected.
It is appreciable that the State eventually saw reason and cut off the fuel subsidy, including lowering taxes to keep prices reasonable. But it should not have been that high in the first place, given the number of levies Zimbabweans are having to deal with. Also, the move to subsidise public transport to ease the impact of the fuel price rise at a cost of about $8 million a month, according to Finance secretary George Guvamatanga, speaks of a government caught in its own web of ineptitude.
It’s difficult to untangle the voodoo economics this government is concocting.
Zimbabwe’s policy mess has become such a familiar tale that it is now very difficult to understand why our leaders, the same we have had for the past 39 years, are repeating the same mistakes they have made since independence in 1980.
Poor economic and politically expedient decisions have largely destroyed a once prosperous nation and jewel of Africa. Indeed, history has been very cruel on Zimbabweans. A decade after the demise of our local currency, our economy is again heading down the same beaten path that led to the destruction of the Zimbabwe dollar by runaway hyperinflation by end of 2008.
The spectre of hyperinflation is obviously holding the economy captive, despite the Zimbabwe National Statistics resorting to annual rebasing to keep the numbers low. The agency has been honest enough to say that based on the previous index, inflation is at 176%.
The country is now firmly seated on a runaway train which continues to gather speed as the three foreign currency rates — official and otherwise; inflation and prices outrace each other and hurtle the economy towards certain doom. But then, we have been here before.