Zimbabwe’s central bank Governor John Mangudya says any salary increments in the country at this stage will choke the ailing economy projected to grow this year by at least 3 percent.
Mangudya believes that what is needed right now are price adjustments which can lead to the lowering of the high cost of living in the country.
Speaking at a beakfast meeting organized by the Zimbabwe National Chamber of Commerce in the country’s second largest city Bulawayo on Thursday, Mangudya said the current industrial production levels cannot sustain any salary increases.
The governor of the Reserve Bank of Zimbabwe noted that price mark-ups are unreasonably high in an economy that is largely driven by the informal sector.
Mangudya also said there is hope for price adjustments since the country recently introduced bond coins to enable people to get proper change whenever they buy various goods.
Although some retailers have welcomed the bond coins which were minted in South Africa at a cost of $50 million, large numbers of Zimbabweans have rejected them saying they are an attempt by the government to reintroduce the defunct local currency.
The coins have been welcome by some commuter bus operators in Bulawayo, where, according to Bulawayo United Passenger Transport Association chairman, Albert Ncube, who told the meeting that the coins are competing with South African coins.
Speaking at the same meeting, Deputy Industry Minister Iris Mabunda said it is pleasing that some companies that benefited from the $40 million Distressed and Marginalized Industries Fund are beginning to pick up.
The Zimbabwe economy is receding at an alarming pace due to lack of foreign direct investment, fears over the country’s black economic empowerment program that compels foreign-owned businesses to transfer majority stakes to locals and lack of capital to revive industries.