Zimbabwe has threatened to withdraw the licences of businesses that increase prices or shut down shop as it tries to stop an economic meltdown triggered by recent fiscal reforms.

President Emmerson Mnangagwa’s government last week unveiled a 2 cents tax on electronic transactions above $10 and introduced foreign currency accounts to deal with a ballooning budget deficit.

The austerity measures pushed parallel foreign currency market rates and led to shortages of fuel and other basic commodities.

A number of businesses announced that they were suspending trading until the situation improved, but the government insisted there was no need to panic.

Hiked prices

“It has been noted with concern that there are some supermarkets and individuals that have started selling commodities at exorbitant prices,” Vice-President Kembo Mohadi said on Tuesday.

“There are also some who are engaged in speculative buying in order to create artificial shortages.

“Government is warning those that have hiked prices and also those that are hoarding basic commodities to create artificial shortages to stop this malpractice forthwith.”

Mr Mohadi said the government had deployed monitors to assess the situation with a view to withdrawing licences of those caught violating the law.

Scrapping subsidies

The measures announced by Finance minister Mthuli Ncube last week will see government cutting down on its expenditure by retrenching civil servants, reducing foreign missions and scrapping subsidies.

Loss making state enterprises will be privatised and government borrowings curtailed, Prof Ncube said.

However, the measures, especially the 2 cents tax on electronic transactions, have angered trade unions who were threatening protests on Thursday, to demand their immediate reversal.

The Zimbabwe Congress of Trade Unions (ZCTU) threatened to shut down the country if the tax was not scrapped.

Economic decline

“If they don’t listen, we are going to call citizens to make sure that we have continuous demonstrations to just shut down the country,” ZCTU President Peter Mutasa said.

“There is no other option but civil disobedience. We are confident that we will put this country under lockdown because if they don’t change, things are going to get worse.”

President Mnangagwa, who won a disputed election in July, has vowed not to reverse the reforms, saying they were necessary.

The president said the country needed tough reforms to reverse two decades of economic decline under long time ruler Robert Mugabe.

Mr Mugabe was overthrown in coup last year that ushered in President Mnangagwa.