Thursday, February 19, 2009

(TALKZIMBABWE) Desist from wanton price hikes, warns Biti

Desist from wanton price hikes, warns Biti
Our Reporter/Reuters/Xinhua
Wed, 18 Feb 2009 22:03:00 +0000

THE Minister of Finance has urged businesses to desist from wanton price hikes that are not related to economic fundamentals.

Speaking at a press conference on Tuesday, Tendai Biti said the price hikes are dealing a huge blow on the consumers who are finding it difficult to access basic goods and services.

He warned the business community against increasing prices saying doing so would be counterproductive to efforts to turn around the economy.

“Now that the country has embraced the use of multiple currencies which are relatively stable, the Government expects all businesses to act responsibly on pricing ... in order to create the necessary confidence in the economy,” Biti told reporters.

Biti announced that Zimbabwe had begun paying Government workers US$100 a month, honouring a commitment made in the Budget presented by then Acting Finance Minister, Senator Patrick Chinamasa.

“We have to get Zimbabwe working again; getting teachers to school is part of efforts to get Zimbabwe to work again, having examination papers being marked is part of having Zimbabwe work again,” Biti said.

Members of the Defence Forces were paid a $US100 tax-free stipend on Tuesday and teachers received their payment on Wednesday. Civil servants in other sectors will be paid today, according to Biti. A total of 130,000 civil servants will have been paid by Friday.

The stipend was paid using the Voucher Payment System (VPS) proposed in the Budget and the vouchers are redeemable at selected local banks.

"With immediate effect, all vouchers issued to civil servants as payment will be redeemable into cash at designated banks," he said.

He said the Government was working with the Bankers Association of Zimbabwe for its members to open parallel Foreign Currency Accounts (FCA) to the already existing savings accounts for all civil servants.

He added that Government expected the FCAs to be operational by March to enable direct payment of March allowances and subsequent cessation of the VPS.

He said that interest rates would be increased on private bank accounts to encourage “a savings culture”, which in turn should help restore confidence in the banking system and ease liquidity problems.

A savings rate of not less than 25 percent Gross Domestic Product is desirable for a sustainable economic growth development, he said.

He also said the government would be making an announcement on payment of pensions within the next two weeks.

Previously, Zimbabweans had been reluctant to keep their money in banks because it lost value quickly, and because limits on daily withdrawals had made it time-consuming to access.

The new Minister of Finance said Government will allow more trade in foreign currency. The change will allow more businesses to legally trade in US dollars and South African rand.

He said Government had to juggle the limited resources it has in order to make those foreign currency payments adding that Government had enough foreign currency to pay the wages for February and March.

Biti dismissed fears that the government did not have the capacity to redeem the vouchers. “As for the source we cannot reveal, we have scrounged around.”

Biti also said new statistics on inflation would be released next month. Private companies would also be required to pay taxes in foreign currency.

Obsolete local credit cards were to be revived in hard currency as the country gradually moved away from cash transactions "to the use of plastic money," Biti said.

-Our Reporter/Reuters/Xinhua

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