AIR Zimbabwe became the first state-owned company to react to the termination of central bank support by hiking airfares for both domestic and international routes under measures the airline’s spoke
sman said were meant to sustain operations.
The airline hiked its fares by between 200% and 500% in a move spokesman David Mwenga said was meant “to make the business viable” following condemnation of the airline by Reserve Bank of Zimbabwe governor Gideon Gono who grouped it among “non-performing parastatals”.
Gono said Air Zimbabwe, together with the Zimbabwe National Water Authority, power utility Zesa, the Grain marketing Board, the Agricultural Research and Development Authority (Arda) and the Zimbabwe Iron and Steel Company (Zisco) had “developed seemingly perpetual reliance on the Reserve Bank for support, unacceptably surrendering their cash-flow planning and survival needs to us”.
Sources said key parastatals like power utility Zesa, which had been restrained from reviewing their tariffs upwards for fear that this could exacerbate inflationary pressure, were already pressing for a review of tariffs to sustain operations.
Zesa, which has unsuccessfully battled poor power generation at its plants, as well as constrained power imports, has always argued that its problems could be solved by charging economic tariffs to its customers.
This has been dismissed by Gono and government because of the effects of such economic tariffs on the inflationary situation in the country, as well as potential social discontent that might arise as a result of a significant hike in electricity tariffs.
Sources indicated that Zinwa, the water supplier in local authorities in Harare and surrounding towns and the city of Chitungwiza, was already seeking authority to increase its charges to survive.
A review of Zinwa’s charges had been dismissed by government, who alleged it was inflationary.
But with Gono’s withdrawal of support to the non-performing parastatals, it is expected that pressure was likely to build up against the parastatals for an immediate review of charges to maintain viability.
It is expected that line ministries or the various parastatals were likely to be more receptive to requests for reviews given that their own resources are depleted and they can not subsidise the loss-making parastatals.