Zimbabwe has drastically hiked prices for the staple maize, adding a new potential inflation risk for consumers already battling the fastest rate of price rises in the world.
President Robert Mugabe, who critics blame for a deepening economic crisis, also publicly criticised his axed finance minister, labelling Herbert Murerwa’s policies a ”disaster”.
The official Herald newspaper reported that the price of maize rocketed up to Z$58 000 (US$232) a tonne from a heavily subsidised Z$600.
The move follows criticism last month from central bank Governor Gideon Gono of the government’s policy of subsidising grain, fuel and electricity, which he said was distorting the economy.
The increase would immediately affect consumers — already grappling with a deep recession largely blamed on Mugabe’s government policies — and may stoke rising tensions in the troubled Southern African country.
Analysts said the increase would hit consumers, although the commodity was already being sold at a higher price on the black market.
”Such an increase will have a huge effect on consumers who will now have to buy maize-meal at a much much higher price, but on the other side the commodity was largely scarce anyway and people were paying a premium on the black market,” James Jowa, a Harare-based economist said.
Food shortages are part of a wider economic crisis, also seen in the world’s highest inflation rate of nearly 1 600%, unemployment above 80% and rising poverty.
Borrow more
The government is expected to also remove subsidies on fuel, electricity and agriculture inputs, which Gono claims are being resold at the black market. He says the removal of subsidies would see inflation spiral, before easing.
Critics say the subsidies are a major drain on the country and accuse the government of using them to win political support.
On Friday, Mugabe was quoted as saying their scrapping and the sale of loss-making state firms depended on the commitment of his government.
”[There] is a lot we can do as government and a lot will depend on [us] … doing certain things or not doing certain things,” Mugabe told the Herald in an interview, in which he labelled some of his former finance minister’s policies as cautious and a ”disaster”.
Mugabe sacked Murerwa in a Cabinet reshuffle last week, with analysts suggesting he may have been punished for public clashes with Gono, who enjoys the veteran leader’s support.
Mugabe criticised Murerwa for not borrowing more money to build dams and roads.
”On that one, I was talking to the governor; I don’t want [a cautious] policy review, which was at [the Ministry of] Finance. It’s a disastrous policy,” Mugabe told the paper in an interview.
”If you borrow money in order to construct a dam, it will in future produce products you can sell. So what is wrong with that? Borrow that money,” Mugabe said.
Shunned by foreign donors over policies such as the seizure of land from white commercial farmers for redistribution to blacks, the government has relied on domestic borrowing and printing money to fund national budget requirements — policies that have helped fuel inflation to the highest rate in the world. — Reuters