November 24, 2005

Government to remove price controls / United States widened sanctions

Zimbabwe is to remove all price controls with finance minister Herbert Murerwa admitting they have contributed significantly to the current hyperinflationary environment, news reports said. Zimbabwe's year on year inflation peaked at 411% in October. Murerwa hence explained at a pre-budget consultative meeting in Harare that market forces were now destined to play a bigger role in the 2006 budget.
Murerwa has made no secret of his disdain for price controls, which were introduced in 2002, since he took over at the finance ministry after the parliamentary elections. The Zimbabwe government has also removed foreign exchange controls and its highly artificial foreign currency auction floors, leading to a major plunge of the Zimbabwe dollar against the greenback. One US dollar now fetches 90 000 Zimbabwe dollars on the official market. Zimbabwe's industry players have repeatedly railed against price controls and on many occasions ignored them amid threats from the government to arrest industrialists charging above the set prices for commodities.
In the meantime, it has been revealed that the United States have widened sanctions against the government, freezing the assets of 128 people and 33 institutions. US President George W Bush issued an executive order targeting those "hindering democratic reform in Zimbabwe", including the President himself. Bush had already issued sanctions against Mugabe and 76 other officials in 2003. According to him, deteriorating conditions in Zimbabwe had forced him to act again. The White House noted that suppression of opposition groups, free media and the judiciary had prompted the measures. "Recent demolitions of low-income housing and informal markets have caused 700,000 people to lose their homes, jobs or both. Additional measures are required to promote democratic change," the statement said. The new additions to the censured list will be banned from business dealings with US citizens. Under the new order, US treasury secretaries and the state department will now be allowed to add to the list without a presidential order. (The Cape Times, South Africa)

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