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Zimbabwe Bank Chief Warns Of 'Unintended Consequences' Of Price Crackdown


Reserve Bank of Zimbabwe Governor Gideon Gono has warned the government of the dangers of Harare's ongoing offensive against high prices which has included the mass arrest of business people, comparing it to the chaos in Iraq.

The Zimbabwe Independent newspaper reported Friday that Gono said in a report to a cabinet task force on prices that authorities could run afoul of “the law of unintended consequences” in that state moves to jawbone and legislate prices lower could result in an economic implosion, leading to deeper political unrest and social dislocation.

"Let's avoid the law of unintended consequences in the action government has taken which will leave the country in a worse-off position than now," said Gono, "avoid the trap of temporary victory and instant gratification that backfires with consuming return-fire from both the business community and consumers alike."

"It is critical that urgent steps be taken to, once and for all, deal with the supply side imperatives without which, or failure of which, will leave the country in a worse-off situation." Reports said Gono himself has come under pressure from the government to compensate businesses for massive losses sustained when authorities ordered prices cut in half or lower and customers cleaned out entire supermarkets.

Ministers and parliamentarians have also expressed concern about the operation - but “Operation Dzikamai,” Shona for "Calm Down,"continued as police arrests of business people mounted to some 2,276 with 276 transport operators also detained.

Police themselves came under scrutiny - Zimbabwe Republic Police spokesman Oliver Mandipaka confirmed that four officers had been arrested in Harare and Bulawayo for alleged looting under the cover of the state’s crash anti-inflation campaign.

Unconfirmed reports said said Olivine Industries Director Phineas Chingono had been arrested. Olivine is 51% owned by U.S. conglomerate Heinz and was earlier the target of a hostile takeover by the Harare government.

The price blitz continued in rural areas with some villagers complaining that official teams sent to enforce price cuts were circulating with people from urban areas who were cleaning out stores and hoarding the deeply discounted goods.

President Marah Hativagone of the Zimbabwe National Chamber of Commerce told reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe that businesses have begun to count their losses, and though the tallying is not done they are known to be deep.

The opposition also weighed in with criticism of the price offensive.

Secretary General Tendai Biti of the opposition Movement for Democratic Change faction led by MDC founder Morgan Tsvangirai said the price cuts are just a political gimmick to shore up support for the ruling party ahead of next year’s elections.

Harare meanwhile has announced a ban on food imports without a permit, beginning August 1. Decrees issued last week bar companies and individuals from importing flour, beef, sugar, tea, cooking oil, fertilizer and other goods without authorization.

Zimbabwe Chamber of Informal Economy President Vimbai Mgijima, who represents more than 2 million cross-border traders, told reporter Carole Gombakomba that while families can still import goods worth US$200 a month, officials could abuse the rules by confiscating goods at the border – as has been happening in recent days.

Meanwhile, Johannesburg-based correspondent Benedict Nhlapo reported from the northern South Africa town of Messina that supermarkets and gas stations there are doing a brisk business with Zimbabweans in search of basic commodities.

As authorities also cracked down on transport fares, omnibus operators in Gweru, the capital of Midlands Province, told reporter Taurai Shava that they fear being victimized as state security agents are said to be monitoring them, one week after they withdrew their vehicles from the roads following a standoff with authorities over fares.

More reports from VOA'S Studio 7 for Zimbabwe...