gtag('config', 'UA-12595121-1'); Mnangagwa says he is committed to a free market economy – The Zimbabwe Mail

Mnangagwa says he is committed to a free market economy

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HARARE – President Mnangagwa has pledged his Government’s commitment to a complete free market economy, arguing there is no justification to put the burden of price determination on the Government.

In response to questions about recent price hikes resulting from exchange rate volatility, President Mnangagwa, in an interview with Brick by Brick magazine, advocated a pricing system that lets supply and demand dictate the cost of goods and services.

Authorities have moved to address the exchange rate volatility after the country switched from the Zimbabwe dollar to a structured currency, Zimbabwe Gold (ZiG), which is backed by precious metals, mainly gold and foreign exchange reserves.

The previous regime would make certain interventions in the market to control prices.

However, such an approach often backfired, as goods and services became scarce, triggering a surge in shortages and price hikes.

“I think in a democratic setup, in a free market set up, you can’t put the burden of prices on the Government,” said President Mnangagwa. “Prices must find their levels in a free market.

“Unless you want us to introduce socialism, then we determine that if you grow an orange, we give it a price.

“I think we are beyond that now. If you grow oranges, you can sell them at the price you want. If another person is selling oranges, the one who is cheaper will sell more oranges.

“The market determines the price of the oranges. This is where we are going and this is what we are doing. You cannot ask us to give prices of what you produce,” he added.

Last week, Reserve Bank of Zimbabwe governor Dr John Mushayavanhu abolished the managed foreign currency system. The system dictated the foreign exchange official rate.

It was replaced by a refined interbank foreign exchange market that facilitates direct trading of foreign currency between willing buyers and sellers.

The new policy measure was introduced alongside the new currency, which is expected to be more stable as it is backed by a basket of precious commodities, including gold, and foreign exchange reserves.

Zimbabwe hopes the introduction of its new currency will foster a stable macroeconomic environment characterised by low inflation and a stable exchange rate.

The Monetary Policy Committee (MPC) predicted that inflation would fall below 5 percent by the end of the year.