Reserve Bank of Zimbabwe Governor Gideon Gono has teamed up with the business community in issuing a strong warning to the government against banning private fuel purchases in foreign currency, saying this will finish off the staggering economy.
Gono escalated his criticism of the government crackdown on business pricing in an interview with the state-controlled Herald newspaper in which he called the decision ill-considered. He said the ban on fuel coupons purchased with foreign exchange must be reversed as it will hamstring banks, mines and other key economic players.
"We must avoid good intentions having negative results," Gono said. "Everything needs to be properly dissected, looking at the pros and cons so that we do not make rushed decisions."
For the second day motorists flooded filling stations to use fuel coupons before they become worthless in two weeks by government order. Widespread stocking of highly flammable petrol in homes and on business premises fanned fears of deadly fires.
Fuel sector sources reported a number of crisis meetings between representatives of the business community, fuel dealers and top officials including Trade Minister Obert Mpofu - who launched the blitz on prices - and Energy Minister Mike Nyambuya.
Sources said business leaders warned the government that without private players in the fuel sector, many businesses would collapse in the next month.
Mpofu remained adamant, however, sources said, insisting that the National Oil Company of Zimbabwe, or NOCZIM, must exercise a monopoly in fuel imports.
A Finance Ministry source said Harare is seeking a nine-month credit line for fuel from Libya. The source said the Joint Operations Command, which unites representatives of the police, the army and the Central Intelligence Organization, recommended that Harare sell diamonds and other minerals forward to back the credit line.
Luxon Zembe, an economist and former president of the National Chamber of Commerce, told reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe that the government's latest directive on fuel is a disaster in the making.
In the macroeconomy, meanwhile, Reserve Bank figures showed domestic debt stocks exploding with total government indebtedness in local currency rising 224% in the past three weeks to Z$6.8 trillion, compared with Z$2.1 trillion in early June.
Economists warn the debt could further balloon if Harare keeps its promise to bail out distressed companies hit by the price blitz. But some see this as inevitable given that the government is preparing for 2008 elections and loosening purse strings.
Chief Economist Prosper Chitambara of the Labor and Economic Development Research Institute said state revenue sources are drying out one by one.