Shelves empty rapidly as Mugabe persists with price control legislation(30-11-06)

HARARE - Economists have said the National Incomes and Pricing Commission Bill, currently before Parliament, which will allow government to fix the prices of various goods below the cost of what they cost to produce, will result in empty shelves.
President Robert Mugabe, himself a staunch propone

nt of price fixing, argues that “runaway market forces” are leading a “vicious, all-out assault on the poor”.

He decries the modern trend of “banishing the state from the public sphere for the benefit of big business.”
Two weeks ago Mugabe was told by a visiting IMF delegation, led by Africa executive director Peter Gakunu, that government has to balance its budget on the backs of the poor.
Having told the IMF to “go to hell” Mugabe blatantly disregarded the advice and is going ahead with his law to fix prices of goods below the cost of producing them.
The official estimate is that Zimbabwe’s budget deficit will be about 14 percent of GDP this year; the government is frantically borrowing and printing money to cover the shortfall. Inflation is now 1,070 percent, and it is predicted to top 4,500 percent next year.
Mugabe argues that greedy businessmen cause price rises. His solution is price controls.
And he has brought the National Incomes and Pricing Commission Bill to Parliament which provides for the establishment of a National Incomes and Pricing Commission. The Commission’s mandate will be to develop pricing models for goods and services produced in Zimbabwe with a view to balancing the viability of products and the incomes and welfare needs of the people of Zimbabwe.
The Commission will be a fully-fledged parastatal with power to make by-laws covering a limited field, but price control regulations will continue to be made under the Control of Goods Act, albeit on the recommendation of or after consultation with the Commission. The Commission’s staff will include inspectors who will also function as inspectors for the purposes of the Control of Goods Act.
Matters currently provided for in regulations made under the Control of Goods Act are covered in the Bill, such as refusal to sell goods; display of prices of goods on sale and conditional selling.
Economists warn that the retailers will simply stop selling the controlled goods and “they will simply stock their shelves with toilet paper, or try to dodge price controls by modifying their products”.
For example, since bread was price-controlled, bakers have added raisins to their dough and called it “raisin bread”, which was not on the list.
Financial analyst Witness Chinyama said through the new law, government will be empowered to extend price controls to practically everything, from typewriters to babies’ nappies.
Some things have to be imported, however, and it is hard to prevent foreigners from profiteering.
Mugabe is anxious that petrol, for example, should be affordable; otherwise, people will not be able to get to work. A strong currency should help, so he has frozen the exchange rate for the past six months, and denounced as a “saboteur” anybody who suggests devaluation. Amid a crippling forex shortage, to keep Zimbabwe supplied with petrol, the distribution of which is a state monopoly, the central bank chief announced a clampdown on the black market: all money transfer agencies are to be shut. Central Bank chief Gideon Gono immediately asked expatriate Zimbabweans to remit money home via the central bank’s HomeLink scheme, whose exchange rate is fixed, and will confiscate almost all of it.
Zimbabweans in the diaspora prefer informal channels, such as Internet-based firms that accept cash offshore and issue friends and relatives back in Zimbabwe with local currency or vouchers for supermarkets.
The National and Incomes Commission Bill is expected to be passed by Parliament without amendment.

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