Zimbabwe Stock Exchange Plunges On State-Imposed Price Structure
Reactions to the state-imposed price cuts included a 60% decline in the Zimbabwe Stock Exchange's benchmark index, down 30% on Friday a
The stampede for bargains last week after Zimbabwe's government ordered prices slashed gave way Monday to long lines as consumers hunted increasingly scarce basic commodities such as bread, maize meal, cooking oil and sugar. Fuel, cement and other durable items had also disappeared, increasing the complexity of accomplishing ordinary tasks for Zimbabweans at all income levels. A source in the Ministry of Finance disclosed that only 1 million liters of fuel are in the government's energy supply pipeline and when that is done the future is bleak. The government is chronically strapped and most suppliers demand cash up front. Yet in the face of a deepening economic crisis, Harare was adamant that it would not back off its campaign to reverse hyperinflation. Authorities said they arrested some 1,300 shop owners and business executives in recent days – 33 managers appeared in court Monday. All but two pleaded guilty to violating the Prices Control Act that went into effect on Friday. They were freed after posting Z$3 million dollars bail each. Trade Minister Obert Mpofu promulgated a one-month statutory instrument legalizing the state's blanket ban on price increases – no price can be raised unless the ministry approves and the instrument obliges all businesses to clearly display prices. Business leaders said they can only wait and see what happens next, noting that their efforts to reason with the government had failed and that the latest directives are understood to come from President Robert Mugabe himself. Reactions to recent developments included a 60% decline in the benchmark index of the Zimbabwe Stock Exchange, which tumbled 30% on Friday alone. Economists expressed deep concern about the impact of the state initiative. Cross said the statutory instruments rushed into force late last week to make the price cuts permanent were likely to paralyze an already traumatized economy.