Mthuli clears the air on inflation figures

Source: Mthuli clears the air on inflation figures | The Herald November 25, 2019

Finance and Economic Development Minister Professor Mthuli Ncube

Herald Reporter
Finance and Economic Development Minister Professor Mthuli  Ncube said Government had not banned calculations of Zimbabwe’s annual inflation rate but the actualities would be determined using the monthly inflation figures.

He said accounting rules allowed the use of such a methodology.

The previous methodology was inconsistent owing to variances of currencies that applied in the previous year.

Prof Ncube said this while fielding questions from journalists during a media briefing in Harare last Friday.

“I did not ban inflation calculation. We said the year-on-year inflation (figures), the methodology we were using was inconsistent because the currency regimes were different. We were comparing a US dollar regime which is pre-February 2019 to a Zimbabwean dollar post that date. We have done that before. We are probably the leaders in it in the world. We did it in 2009. There is nothing new, just wait for two months you will get the year-on-year inflation in February,” said Prof Ncube.

“There is month-on-month inflation and the accounting rules allow for the use of month-on-month inflation indices and accountants know this. There is no problem. There is no challenge at all. We expect them (Zimstat) to do their inflation adjusting accounting on the back of the month-on-month inflation.”

Prof Ncube said the Government was determined to fulfil its promises including payment of bonuses for civil servants this month instead of staggering it up to next month.

He said Government was spending about $40 million on transport subsidies on Zupco as a way of providing a social safety net for commuters.

“The issue of Zupco is not just a social protection issue, it is about making our cities work. For cities to function as drivers of growth, they need an efficient public transport system.

“So Zupco is not just about subsidies, which is also good. We are spending about $40 million per month, it is about efficiency, it is part of urbanisation. Our cities are big drivers of economic development,” said Prof Ncube.

Turning to industry, Prof Ncube said the Government would allow industry to borrow money on the back of guarantees from the State.

“We are proposing something new in industry to support that micro aspect of industry as a driver of the economy. We are proposing a guarantee scheme for industry to access credit from the financial system on the back of a Government guarantee.” So we are working on the modalities. This is targeted at retooling and trade financing. Industry is a low hanging fruit. We want industry that is driven by research from our universities and innovation hubs. We will also make sure that industry comes closer to our universities for the research-driven industrialisation opportunities.”