‘Inflation a regime change tool’

By The Standard | Jul. 26, 2021 | 4 Min read

AFTER two decades of blaming sanctions imposed by the West for its failure on the economic front, the Zanu PF government has found a new scapegoat — inflation — describing the scourge as enemy-engineered to effect regime change.

BY MOSES MATENGA

Addressing Senate on Thursday, Information minister Monica Mutsvangwa claimed that government had unearthed empirical evidence to show that the country’s galloping inflation was a creation of the second republic’s critics to forestall efforts towards reviving the country’s economic fortunes.

Mutsvangwa was responding to opposition legislators who blamed Statutory Instrument (SI) 127 of 2021, meant to curb foreign currency black market activities, for fuelling inflation in the country.

“Generally, the economy of this country has done very well. It is doing extremely well to the point where even the International Monetary Fund and World Bank are actually applauding the government for what the dream team in the fiscal and monetary policies are doing,” she said.

“There are a number of things which the President (Emmerson Mnangagwa) and the government have done to make sure that we deal with the issue of the weapon of inflation, which has been used in this country by dominant post-imperial colonialists to just make sure that there is regime change in this country.

“The introduction of the SI, even the introduction of the forex auction, has also dealt a blow to that agenda by the enemy. Yes, this cannot change overnight, but we all know what it was like in June 2020, the situation that was there before the SI 127. Looking at what is there today, there is certainly a positive change. Yes, we still see the parallel market, but the parallel market rate which is there now, the activity is very small and they are not as bad as what was there before the statutory instruments were put in place.”

Zimbabwe’s inflation rate stood at 106,6% as at June 2021, according to the Zimbabwe National Statistics Agency.

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The World Bank recently said Zimbabwe’s inflation slowed down to 322% in February 2021 from a peak of 838% in July 2020.

When the country introduced the Zimdollar in mid-July 2019, inflation soared to 175%, and by March 2020, the country entered hyper-inflation with annual inflation rates above 500%.

By July 2020, annual inflation was estimated to be at 737% by private bodies.

Since the November 2017 coup, which saw Mnangagwa taking over from the now late former President Robert Mugabe, government has been struggling to tame inflation and restore economic stability.

Government has previously blamed the economic meltdown on sanctions imposed by the West and the United States, but the latter have fingered the regime’s poor economic management and corruption.

Debating the issue in Senate last week, MDC-T senator Morgen Komichi said: “When government introduced SI 127, it had very good intentions to help the people. However, what is on the ground is very negative.

“As a result of SI 127, the parallel market has gone up from $120 to $150 per US$1, which is an increase of 25%. Prices of services and goods have gone up abnormally.

“Salaries and wages of the workers have been heavily eroded. The question is: what is government doing to manage this pandemic and who and what is driving the parallel market?”

Opposition MDC-T spokesperson Witness Dube said Mutsvangwa should not involve politics in a matter that is purely economic, adding that government should do what needs to be done to tame inflation.

“The economy has its own language and it has nothing to do with politics. It is irresponsible for government to want to politicise everything,” he said.

“It (government) has to listen to the language of the economy and act accordingly. It is a clear acknowledgement of failure to relate to how the economy is at the moment.”

Economic analyst Prosper Chitambara told NewsDay that inflation in the country was being driven by the growth in money supply.

“We have seen a bit of stability in terms of the exchange rate, although the stability is still a bit fragile. We have seen government trying to control money supply growth, and so that has resulted in a slowdown and inflation.”

On SI 127 and its effect on inflation, Chitambara said: “It saw most businesses increase prices and there was clarification from government, and I think that has stabilised the situation.”

Confederation of Zimbabwe Retailers president Denford Mutashu said a number of factors were fuelling inflation in the country.

“The COVID-19 lockdown has limited the number of operating hours and it increases the general cost of doing business and what it means is that business generally has to adjust prices to capture costs associated with the reduced operating hours against rising costs,” he said.

“SI 127 has a huge impact on raising the pricing level in the economy to the current levels, and so ordinarily if prices jump, they hardly come down and it also came through to realise the inflationary pressures we are feeling right now.”

Mutashu said among other things, the disruption of business in South Africa following weeks of violence and looting also triggered the price madness and inflationary pressures in Zimbabwe since the latter heavily depends on its southern neighbour for trade.