Basics price hikes expose the myths of Chinamasa’s budget

By Jacob Mafume

On the 8th of December President Biti presented the MDC Alliance’s alternative national agenda towards a transformative democratic developmental state.

We challenged the myths around growth projections of 4.8 percent presented in the fiscal policy statement for 2018.

We argued then as we do now that the Macroeconomic framework was a fiction, we specifically mentioned the myth around inflation rates.

The underlying framework justifying 4, 8 percent growth rate is non-existent. Inflation is already way above 3 percent due to the high cost of the US dollar. With the existence of multiple exchange rates, real inflation is above 40 percent and some commodities are as high as 240 percent, the framework is therefore not legitimate.

Current inflation developments in the country vindicate our theory, we therefore find the dishonesty in the budget presentation counterproductive.

On Friday a report in the Daily News indicated that prices of beef, rice, flour and cooking oil shot up to 125 percent.

Over the weekend bread prices increased by 10 percent, in another episode reflecting the relentless inflationary situation albeit in the middle of a recession. A situation which the legendary John Maynard Keynes would need to spend time to define.

The challenge we face as a nation is not that of inflation but that of a leadership in denial who fail to appreciate the need for structural, fiscal and monetary changes as the situation requires.

The default “command reaction” to the price shocks was that of intimidating actors in the economy instead of addressing the fundamental problems.

The old talk of sabotage has not gone away from the lips of the ZANUPF leadership, proof that the administration never learns.

Talk of people trying to profiteer from price hikes was expressed at the ZANUPF congress even through the highest office.
Our fear is that ZANUPF might take a premature remedy of totalitarian price controls which backfired under the Masimirembwa Commision.

We want to state that threats on business actors will not solve inflation challenges neither will they resolve the economic crisis.

We urge the government to address the multiple exchange rates situation as it is one of the drivers of inflation.

Repayment of funds that were raided by Minister Chinamasa in NOSTRO accounts at the RBZ must be done, this will ensure the businesses are able to import and resale on normal profit margins.

More importantly the government must demonetise the bond note as a matter of urgency, the pseudo currency is the key source of distortions in the financial markets which are ultimately resulting in inflation.

The PDP is concerned by Minister Chinamasa’s failure to deal with this issue in his 2018 budget presentation.