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Extension of Price Cuts Spells Ruination For Zimbabwe, Economists Say


President Robert Mugabe's pledge to extend controversial price cuts imposed by the Zimbabwean government through the end of 2007, made during a Heroes Day holiday speech Monday, has some experts forecasting economic ruin for the country.

In an address at the National Heroes Acre honoring fallen liberation heroes, Mr. Mugabe not only warned merchants against raising prices without state authorization, but also threatened state action against those who ignored the order.

Economists said Harare's imposition of price cuts without subsidies to manufacturers would only worsen shortages of a wide range of goods, while business contraction will erode the tax base, forcing Harare to print more money, driving inflation higher.

Economist John Robertson of Harare and communications chief Eric Chinje of the African Development Bank offered their perspectives on the government price policy in a discussion with reporter Ndimyake Mwakalye of VOA's Studio 7 for Zimbabwe.

Chinje said trying to cap prices rather than letting market forces work is a mistake.

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

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