Just 24 hours after announcing a blanket freeze on wages, salaries and service charges, the Zimbabwean government at the weekend eased more of its price controls by allowing the tourist industry to increase its rates by up to 50 per cent.
The moves, which indicate growing indecision within President Robert Mugabe’s administration, follow a price freeze imposed at the end of June, which has been partially relaxed in the past few weeks as supermarket shelves empty and shortages worsen. The six-month wage freeze imposed on Friday bars employers and service providers, including schools and doctors, from increasing wages or fees.
Freeze on Wages Is Latest Step to Stanch Inflation in Zimbabwe;
Harare’s Financial Gazette newspaper, which is controlled by the president of the government’s reserve bank, Gideon Gono, reported in this week’s edition that value-added tax receipts had dropped by up to 90 percent since the price-cutting campaign began.
The Zimbabwe Independent, one of the few newspapers not under government ownership, reported that the price cuts had cost the government 13 trillion Zimbabwe dollars in lost tax revenue. At current black market rates, that totals about $55 million — a vast sum for a government that is already technically bankrupt.
The government continues to function by printing money to pay its bills, but as the currency has dwindled in value, state workers have increasingly demanded regular raises. Zimbabwe’s 100,000 teachers, all government employees, have been threatening to strike if their pay is not increased.
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