>From: Lucien W. <029walt at cosmos.wits.ac.za> to <a-infos-org at tao.ca>
> Comrades
>
> Zimbabwe news -- however, it must be noted that the price controls
> in question are only being proposed as a response to mass class
> struggle by the unions. If the IMF blocks them then the Zimbabwe
> regime will be in deep shit- unable to offer even minimum
> concessions to labour. The consequences could be a substantial
> escalation of the class struggle.
>
> Lucien
> ------- Forwarded Message Follows -------
> ________________________________________
> Zimbabwe Independent, 24 June 1999
>
> Price controls threaten IMF US$200 million support
>
> PROSPECTS for the release of a $1,9 billion (US$50 million) tranche
> under a fresh $7,6 billion (US$200 million) 13-month credit facility
> from the International Monetary Fund receded this week as the Ministry
> of Industry and Commerce went ahead with the gazetting of the price of
> mealie-meal and threatened to take similar measures to control the
> price of bread.
>
> But Ministry of Finance officials said they would work hard to stop
> the gazetting of bread prices as this could sabotage support from the
> Bretton Woods financier.
>
> Cabinet had already approved the signing of a letter of intent between
> it and the IMF. By this week, it had not yet reached the IMF
> Washington office, but Michael Nowak, IMF assistant director for the
> Africa department, said they expected it "soon".
>
> The letter of intent would commit the government to stringent fiscal
> discipline and do away "completely" with price controls.
>
> Cabinet is understood to have discussed the issue on Tuesday. It had
> been thoroughly appraised of the consequences of non-compliance on
> undertakings with donors at a time when the country badly needed their
> support to shore up ailing currency reserves and restore both domestic
> and international investor confidence.
>
> "The government has said it will transmit to us the `letter of intent'
> and accompanying policy memorandum once the government's own review
> procedures have been completed," Nowak said responding to written
> questions from the Zimbabwe Independent. "We expect these documents to
> emphasise government's commitment to continued fiscal prudence."
>
> Nowak said the IMF, which had been busy working on Zimbabwe's
> documents for approval by its board, would not support a programme
> that upheld price controls.
>
> "Attempts at controlling maize-meal prices have not been successful
> and that should give a lesson on the control of bread prices. We'd
> definitely not support that programme," Nowak said from Washington.
>
> "Our information is that the price of bread has not yet been gazetted.
> If it were to be, this would clearly cause us difficulties," Nowak
> explained.
>
> "On the expectation that bread prices will not be a problem, we expect
> our internal review procedures to progress satisfactorily. This will
> take a few days, at which point we will be in a position to set a
> tentative date for discussion by our executive board of the credit
> arrangement," Nowak said.
>
> The IMF's sister Bretton Woods institution, the World Bank, which is
> lined up to consider a $7,6 billion IDA credit, also expressed similar
> concerns, saying it saw price controls as a "policy reversal" on the
> part of the government.
>
> "Our board does not look favourably at that (price controls)," said
> the World Bank deputy resident representative, Roger van den Brink.
> "We agreed these (price controls on mealie-meal) would be temporary
> and would be phased out. The NECF (National Economic Consultative
> Forum) is doing a study of pricing for basic commodities. If the study
> does not show widespread profiteering by millers, government should
> follow that conclusion and stop the controls. We hope it's done soon,"
> Van den Brink said.
>
> The price of mealie-meal had already been controlled by the government
> in an effort to stem social upheaval after spontaneous food riots
> erupted in January 1998. It took heavily armed troops to crush the
> riots, resulting in injuries and the death of at least 10 people from
> the use of live ammunition.
>
> Government sources said this week that a tug-of-war had developed
> between the Ministry of Industry and Commerce, led by Nathan
> Shamuyarira, and the Ministry of Finance, led by Herbert Murerwa.
>
> On the one hand, Murerwa's ministry was said to be vigorously opposing
> controls on bread pricing, saying this would contradict undertakings
> with major donors. On the other hand, Shamuyarira's ministry saw
> government's intervention to moderate basic commodity prices as the
> only way to minimise immediate social unrest. Shamuyarira is
> understood to have a number of cabinet backers on the issue.
>
> "The Ministry of Finance is working hard on this but it is facing a
> lot of opposition," a government source said, adding that the Ministry
> of Finance had made frantic efforts to block the gazetting of bread
> prices which had been held up by the civil service strike.
>
> The IMF, Nowak said, was working out a programme to rescue the country
> from its economic woes. He said they had been "moving ahead with
> internal arrangements" for Zimbabwe's credit facility.
>
> He said they had been working hard "to get approval from our
> management" to support Zimbabwe's request for balance of payments
> support. "We have to convince our management that it's a programme
> that the IMF can support before it's taken to the board," Nowak
> explained.