MPs summon Finance minister as Zim faces new hyperinflation

MEMBERS of Parliament (MPs) have demanded — again — that Finance minister Mthuli Ncube avail himself to the National Assembly to deal with the fast-deteriorating economic situation and answer questions as Zimbabwe faces resurgent hyperinflation amid skyrocketing prices.

NATHAN GUMA

This came as American applied economics professor Steve Hanke warned that the country is on the verge of yet another hyperinflation episode as monthly inflation by his measure reached 102%.

 This has exceeded 50% for the last 25 days. If that trend continues, Hanke says, Zimbabwe will be on track to experiencing hyperinflation anytime soon.

Hyperinflation exploded in 2008, reaching some of the highest levels ever seen, leading to an economic meltdown, falling standards of living and total disruption of the marketplace. Zimbabwe was engulfed in hyperinflation in 2008, with monthly inflation climbing to 79.6 billion percent, while the annual rate of increase surged to 89.7 sextillion percent in mid-November 2008.

Zimbabwe’s annual official consumer price inflation rose to 86.5% in May 2023, up from 75.2% in April, marking a deviation from the downward trend observed since the beginning of the year.

However, Hanke says inflation is actually 761%. The country’s protracted problems reflect political instability and extended periods of economic mismanagement.

MPs say as a result of currency volatility and rising inflation, the majority of Zimbabweans are failing to access basic commodities, while many workers are living in abject poverty.

In the aftermath of currency trade liberalisation, the Zimdollar continues depreciating, trading at US$1:ZW$5 086.3307 at the official auction system, while it scaled US$1:US$7 000 in the parallel market, decimating salaries and plunging the standards of living of the already impoverished Zimbabweans. Major retail outlets have been using different exchange rates.

For instance, in a survey by The NewsHawks on Wednesday this week, Innscor was using the US$1:ZW$3 400 rate, while supermarket chain Pick n Pay’s rate was pegged at ZW$3 340.

Other stores, Spar and OK, were using ZW$3 350 and ZW$3 280 respectively, while fast-food outlet Chicken Slice was using ZW$3 200.

Glen View South legislator Fani Munengami this week questioned Acting Speaker William Mutomba why Ncube was taking long to bring a statement on the economic situation.

“I will repeat the issue which has to do with ministers who do not come to Parliament. We ask questions and no-one answers. No minister has come to give us a ministerial statement with regards to issues of national interest,” he said.

“I gave an example of the minister of Finance, honourable Ncube — we raised the issue of our currency which has been hit hard by inflation. As of today, the rate is ZW$6 000 against US$1. We have asked what the minister is doing about this issue because Zimbabweans are suffering, but he has not yet come to this House to explain.

“We are about to go for elections and no minister has come to Parliament. Have they gone short of plans? May you give us direction, honourable Speaker, on how we should convey these issues to the minister so that they come to Parliament and give us ministerial statements,” Munengami asked.

In response, Mutomba said he would inform Ncube to bring a statement to Parliament.

“On the one to do with the minister of Finance and Economic Development with regards to the rate (ZW$6 000:US$1), I remember that it was requested here in the House that the minister should bring a ministerial statement with regards to inflation. The same issue on inflation had been raised again. We will inform the minister to come and give us a ministerial statement,” he said.

 Makoni Central legislator David Tekeshe also contributed to the discussion.

“My point is similar to that of honourable Munengami. I got into a shop today and I was shocked to find that the local currency was around ZW$6 000 and ordinary people can no longer afford bread.

“We need to come to the point of CDF [Constituency Development Fund] which is just lying idle because no-one wants the RTGS and they charge the black market rate. The request is that if Parliament could negotiate to benefit from the auction floor so that this is looked into because ZW$21 million has gone down to US$4 000 and is no longer enough for the constituency,” he said.

Ncube last week paid surprise visits to Bulawayo shops, ordering them to slash US dollar prices, raising a public outcry.

 President Emmerson Mnangagwa, Ncube and the Reserve Bank of Zimbabwe have reacted with anger and threats to the deteriorating situation, threatening to unleash law and order instruments to deal with a market crisis.

 After Ncube’s raids, legislators challenged the Finance minister to present a ministerial statement on the price escalations, erosion of salaries and the incapacitation of many workers amid stratospheric inflation wreaking havoc across the economy, communities and households.

Ncube did not come. The Consumer Council of Zimbabwe said this week that a family of six now requires ZW$1 million a month to survive, up from Z$611 275 in April — but salaries remain stagnant.