Chronicle Editor
THE main government aims for the economy are full employment, price stability, economic growth, redistribution of income and stability of balance of payments. A government can operate a range of policy measures to achieve these aims and it is judged on their success or otherwise. Performance of the economy, however, is influenced not just by government policies. In a market, which is becoming increasingly global, one economy’s macroeconomic performance is being affected more and more by the dynamics of other economies,” says an online blog, www.yourarticlelibrary.com.
The blog further argues that “governments aim for price stability because it ensures greater economic certainty and prevents the country’s products from losing international competitiveness. If firms, households and workers have an idea about future levels of prices, they can plan with greater confidence. It also means that they will not act in a way that will cause prices to rise in the future.”
The Zimbabwean Government recently implemented a number of policies meant to arrest inflation and stop the price madness of goods and services. The price madness and inflation was actually caused by unscrupulous businesspeople who were pegging prices for their goods and services against the black market and ignoring the official exchange rate. This has a negative effect on the disposable income of workers and general consumers.
However, there is a wave of consumer excitement in the country as businesses have started responding positively to the raft of measures put in place by the Government to tame inflation which was stoked by unscrupulous business tendencies, rent-seeking behaviour and speculative forward pricing.
This comes at a time the demand for the Zimbabwean dollar continues to soar as more businesses and individuals seek to transact using the local currency. That has seen retailers and service providers lowering prices of basic goods and services while those that have not done so have maintained a semblance of price stability.
As part of measures put in place by the Government to stabilise the price increases that had been taking place in the past three months, the Reserve Bank of Zimbabwe’s Financial Intelligence Unit (FIU) had to order some retailers and manufacturers who were exclusively charging certain goods in foreign currency and using the black-market rate for currency conversion to revert to ethical business practices. A number of businesses were also fined for unethical conduct.
A snap survey carried out by Sunday News in Bulawayo last week revealed that most supermarkets and businesses had started to use the official bank rate with an accepted margin of 10 percent of the interbank rate, while also reducing prices of basic commodities in local currency. Confederation of Zimbabwe Retailers (CZR) president Mr Denford Mutashu called on businesses to continue responding to the stability in the exchange rate by reducing prices in Zimbabwean dollars.
“The expectation is to see prices continue falling in line with key economic indicators like stability in exchange rates, improved power supply and other Government measures,” he said.
Among other key measures, the Government recently said taxpayers must settle all local currency tax obligations in local currency and must also settle 50 percent of the foreign currency portion of their corporate tax obligations in local currency. To ensure compliance with the latest regulations, Treasury said statutory penalties for late payment of taxes will be vigorously applied.
This has resulted in a number of businesses that had previously pegged prices exclusively in forex, now enticing customers to transact in local currency.
Economic analysts and commentators have said the developments in the economy were evidence that the interventions put in place by the Government were effective in stemming inflation which they said was no longer economic but political.
Online Reporter