RBZ engages public entities

PHILLIMON MHLANGA

The Reserve Bank of Zimbabwe (RBZ) has engaged State -owned companies over the increases in tariffs amid concerns that the hike would disturb the central bank’s stance to stabilise inflation rate.

Zimbabwe’s annual inflation rate dropped to 194% in April from a high of 837% in June last year.

But, tariffs charged by the public entities have been skyrocketing, something which has a negative impact of pushing up prices of goods and services, and in turn, push inflation high.

Analysts have described the increases by the public entities as “government inflation”.

This has forced the RBZ, which has set an annual inflation target of 55% in June this year, to engage government and the entities, according to RBZ governor, John Mangudya.

“We have discussed the matter with the government and the public entities that we need to make sure that we walk the talk on stabilising the inflation,” Mangudya said.

 “So, going forward, we shall see this matter being addressed in such a manner that will not cause inflation and that it minimises side effects of other policies on inflation. We are going to anchor inflation expectations.”

He added: “Our inflation is going down because of our baseline policy. The Reserve Bank’s monetary policy stance is premised on stabilising inflation. It’s premised on controlling inflation because inflation is the root cause of all the evils in the economy. So, we are doing this in a number of ways through the monetary targeting framework and the reserve money targeting framework.

“Last year we were targeting 25% of reserve money, but reducing it this year to 22.5%. The outrun in this quarter is fantastic. We had 2.6% growth of reserve money against a target of 22.5%.  So we are quite happy in that area.”

Mangudya said the increases by public entities have serious repercussions on market stability, the recovery of the productive sectors of the economy such as mining, manufacturing, agriculture and tourism, which the government wants to drive the country’s economic recovery.

There have been concerns that prices of public utility tariffs have spiked at a time the economy is reeling from the effects of Covid-19 pandemic, undermining business confidence.

Recently, the Zimbabwe National Road Administration (ZINARA) hiked toll gate fees in foreign currency by more than 40% following the gazetting of Statutory Instrument 32 of 2021. ZINARA justified the increases saying it was part of efforts to improve the country’s road network.

Several city councils including Harare, Chitungwiza, Bulawayo, Gweru and Mutare, have also hiked property rates, water charges, sewer charges and clinic consultation fees.

Power utility, ZESA, which recently increased its tariffs, is also seeking another hike.

It has since approached the Zimbabwe Energy Regulatory Authority, with a proposal to increase its tariff.

Currently, ZESA is charging an average tariff of US$0.075 cents per kilowatt hour (kWh), which the power utility says has remained insufficient to support its operations.

ZESA wants the tariff to go up to about US$0.10 cents per kWh.

It appears ZERA would grant ZESA the tariff increase.

“ZESA is currently incapacitated. We need to look into the problems of ZESA and be able to support the power utility so that it at least maintains the system,” ZERA chairman David Madzikanda said.

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