Zimbabwe to Reimpose Price Controls

President Robert Mugabe plans to impose price controls on essential foods, despite saying Tuesday that the worst of Zimbabwe’s economic crisis is over.

“The challenges we face are by no means insurmountable if there is unity of purpose,” Mugabe told lawmakers in an annual state-of-the-nation address. “I am convinced we have gone past the worst patch.”

But, embracing policies his government had abandoned seven years ago for free-market reforms, Mugabe told a South African newspaper that his government will reintroduce price controls.

In an interview with the Star of Johannesburg, Mugabe said prices of cornmeal, bread and beef will be fixed by the state to cushion the poor from further hardships.

“We definitely want to restore controls,” Mugabe said. “We have already started” by preventing corn millers from raising their prices without government permission.

He ruled out providing government subsidies to the food producers to compensate for their inability to raise prices.

Price-fixing was abandoned when Mugabe’s government adopted market-led economic reforms in 1992, ending a decade of socialist economic policies.

The change could be aimed at preventing protests over the collapsing economy. In 1998, six people died in riots triggered by a 25% increase in the price of cornmeal.

Economic woes are seen as the biggest single threat to Mugabe’s hold on power before parliamentary elections next year. Inflation is high and unemployment exceeds 50%.

Mugabe told the Star that economic liberalization came to Zimbabwe as calls for economic and democratic reform swept the continent with the end of Cold War alliances in Africa. By abolishing price controls, inflation soared and the poor were plunged deeper into poverty, he said.

Imposing price controls is likely to upset Western donors, the International Monetary Fund and other financial institutions that have backed market-linked reforms. The IMF and the World Bank earlier this year froze some aid, saying economic reform targets were not being met.