Zimbabwe government to blame for rising inflation, tries to make amends

As the Zimbabwe dollar tanked and inflation soared, government responded in the only way it knows how: wagging fingers and spinning dark conspiracies.

But, all along, the government knew the source of the inflation; it was where the other fingers were pointing at all this while – the government itself, and its mismanagement of public contracts.

On 4 August, Treasury Secretary George Guvamatanga wrote to government ministries and departments, telling them he is suspending all payments to all government suppliers. He will not pay out to any contractor, until there is an investigation into what the Ministry of Finance thinks is a racket by suppliers to inflate prices by invoicing at the parallel market exchange rate.

Guvamatanga blames this pricing for “instability in the foreign exchange market characterised by unnecessary movements on the rate resulting in exorbitant prices being charged”.

“In this regard, Treasury is immediately suspending all payments to MDAs (ministries, Departments and Agencies) while awaiting your submission of reports of findings of the due diligence exercise on all running and future contracts with special focus on pricing. Going forward, you are required to seek Treasury approval on contract prices in order to ensure effective control in the utilisation of public resources as guided by the (Public Finance Management) Act,” Guvamatanga says.

Any future payments, he writes, will have to be “reviewed and signed off by the Accounting Officer ensuring value for money in procurement and confirming that the pricing framework is in line with Government policy.

In his letter, Guvamatanga says the inflated invoices have eroded the budget. The demand for extra money is “exerting pressure on Treasury in demanding more fiscal resources which are not aligned to the revenue inflows, thereby creating an inherent fiscal risk of unsustainable budget overruns and budget deficits”.

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