Finance minister Mthuli Ncube has rejected calls to reverse the decision to stop reporting year-on-year inflation, saying the move will not impact negatively on the economy as suggested by some economists.
Ncube was responding to pleas by industry players to reverse the policy during a review of his supplementary budget at an event hosted by Alpha Media Holdings in conjunction with the Zimbabwe Economic Society in Bulawayo on Friday.
On August 1, the minister said the Zimbabwe National Statistics Agency (Zimstat) won’t publish the inflation figures until February 2020.
He said the move was meant to allow Zimstat to collect comparable data after the introduction of the real time gross settlement (RTGS) currency early this year.
Ncube said Zimbabwe was not in a hyperinflationary environment despite the rapid increase in prices.
“If you want to annualise, take your month-on-month, annualise it and multiply by 12, you are allowed to do that. There is no difficulty,” he said.
“People have a narrative about hyperinflation, so if you take way that narrative they don’t know what to do. They can’t cope.
“Don’t account for hyperinflation. There is no hyperinflation, there is just inflation.”
Tapiwa Chizana, the Institute of Chartered Accountants of Zimbabwe president, had told Ncube that the non-publication of the inflation figures would backfire.
“I got a call from a foreign investor who has got a subsidiary in Zimbabwe, they asked me the question: When are we going to start accounting for hyperinflation?
“They said they understand that government is no longer publishing the information,” he said.
“As an institute we don’t feel equipped to be able to respond in a way that is nation building and constructive.
“What happens is when foreign entities start calculating your own inflation rate for you, firstly there is the issue of misinformation.”
Zimbabwe’s annual inflation was pegged at 175,7% in June as the weakening official exchange rate pushed up prices.
Independent observers say the country’s inflation is much higher and is only dwarfed by that of Venezuela at a global level.
Ncube pleaded with industry players and businesses to be more patient with him.
He said Zimbabwe was undergoing a transition, which would be characterised by some policy inconsistencies.
“So allow the transition,” he said. He said local authorities were allowed to import fuel directly.
Oil Expressers’ Association of Zimbabwe chairman Busisa Moyo told Ncube that a stable exchange rate will be crucial for Zimbabwe’s economy to be revived.
“We still have challenges with confidence and I think that the confidence will be highlighted in terms of the exchange rate,” he said.
“I think it is a held view that if you, minister, are able to hold this rate between 9 and 12 for 12 months.
If this time next year the rate is still hovering between 9 and 12 to the United States dollar, it’s been there for the last six weeks which is a longest sort of we have seen, so there is some stability that is coming there, but for us to get to a level of confidence in the local dollar we will need to see some measure of stability.”
Moyo said the government’s austerity measures had resulted in depressed consumer spending, which was a threat to industry’s viability.
“There is no spending capacity and that has an impact on production and our ability to keep supplying commodities into the market with no demand,” he said.
“So we understand austerity, but how do we balance this equation so that we have demand that allows some measure of economic growth so that we don’t slide into a deleterious recession where production goes through the floor?”
Moyo also advocated for market reforms whereby the economy is driven by market forces.
Shepherd Chawira, the Confederation of Zimbabwe Industries Matabeleland chapter president, said Ncube needed to channel the much touted budget surplus to the productive sectors of the economy.
“We have a budget surplus of plus or minus $800 million and we have about $200 million in the current account and the minister has not clearly told us how he is going to utilise that money,” he said.
“The proposal from industry is: Can we commit this money to the productive sectors? We need to increase our production.
“This money can be utilised to borrow at concessionary rates, low interest rates to the productive sector.”
Chawira said industry, especially in Bulawayo, was more worried about the suspension of some incentives in the special economic zones, saying people had planned around that.
Golden Muoni, the Zimbabwe National Chamber of Commerce Matabeleland chapter president, said the government must channel more resources to revive irrigation projects in the country to boost farming production. – The Standard