(TALKZIMBABWE) Biti in trouble: food prices rising again

Biti in trouble: food prices rising again
Ralph Nkomo
Mon, 27 Jul 2009 04:44:00 +0000

FINANCE Minister Tendai Biti's budget has failed to stand the test of time as food prices have already started rising. An increase in the cost of fuel which was implicit in his budget statement released barely two weeks ago has sent basic food prices rising across the board.

Biti promised to rebuild the economy when he took over the finance ministry. However, many of his policies have mirrored the policies of then acting finance minister, Patrick Chinamasa who first suggested a US$100 stipend for civil servants alongside their salary payments.

Chinamasa also suggested the use of parallel currencies; the Rand and US dollar, alongside the Zimbabwean dollar.

Although Biti has claimed that the Zimbabwean dollar "is dead and buried" and is not coming back, he has continued to pay civil servants' salaries directly into their bank accounts in Zimbabwean dollars, attracting criticism from analysts who accussed him of deliberately misrepresenting facts. The monthly allowance of US$100 was paid in vouchers redeemable in US dollars.

The shortage of fuel in the country has sent prices sky-rocketing.

The state-owned National Oil Company of Zimbabwe (NOCZIM) does not have the required cash to import adequate supplies of fuel. The prices of diesel and petrol are therefore going up triggering a rise in the price of every basic commodity.

In his Mid term Budget Statement, Biti announced a reduction of excise duty on diesel, but maintained petrol at US20 cents per litre. This does not augur well for motorists and garages alike as they will find costs of operation (of businesses and commuting unchanged and still restrictive).

Instead Biti slashed duty on newspapers to 0% - a political move that had nothing to do with addressing the immediate problems of Zimbabweans and recovering the Zimbabwean economy.

Despite Biti's pronouncements, petrol and diesel prices have gone up to 14 and 15 rands from 10 and 9 rands per litre respectively in recent days.

According to a report by the Zimbabwe National Chamber of Commerce (ZNCC), retailers and other businesses have had to adjust prices accordingly to cater for the rising fuel costs.

“The recent fuel increases has affected businesses,” said ZNCC president Obert Sibanda. “The increase in prices of basic commodities is in response to the increases in fuel prices. We use fuel to produce and to transport most basic commodity like bread.”

Zimbabwe currently requires between 100 and 120 million litres of fuel per month, consuming about 1.2 million litres of fuel a day. NOCZIM is currently importing 40 to 50 million litres, or roughly half the required quantity.