By Violet Gonda

23 August 2005

There has been no trading on the Zimbabwe Stock Exchange (ZSE) since the Finance Minister Herbert Murerwa announced new measures when he presented a Z$6.6 trillion supplementary budget and his mid-term fiscal policy review statement in parliament, last week. Although stockbrokers were turning up for business, they have not been trading as clients told them not to trade in light of the new 10% withholding tax on the sale of shares.

This resulted in sellers being left with un-tradable shares in their hands as there were no buyers. The stock market is considered to be one of the main barometers of the health of an economy in any country and the current situation is clear that the economy has reached a critical breaking point.

Economist John Robertson says Zimbabwe's economic problems have origins in the political decisions that have been made by the government. He says it's these political decisions that have to be sorted out to allow people to make long term plans. The economic expert says the economy has lost its principle foreign currency earners in the agricultural sector due to the controversial and chaotic land reform programme. Some of the country's biggest earners were the tobacco, beef, dairy and tea industries, resulting in the country losing its ability to earn foreign currency.

Robertson says, among other issues, the poor level of investment presently taking place will dip further because it was a bad idea for the government to collect capital gains tax from the little capital in the country. He says this reduces the amount that is available for investment.

It's all doom and gloom in Zimbabwe as the country is marred by hyper-inflation and in recession. Robertson said this means there is no employment resulting in many skilled Zimbabweans leaving the country. There are no investments and most of the people making money right now are opportunists who are trading in goods that are in short supply.

Meanwhile, an International Monetary Fund delegation is in Zimbabwe for meetings with the government and private sector ahead of its executive board meeting on September 9 when Zimbabwe's expulsion will be considered. John Robertson said there is no clarity on the issue of this visit and the South Africa loan, saying it has become a guessing game. He says either way, the loan will not make any difference to the economic crisis as the loan won't make money available to local buyers and the scarcity of basic commodities will continue.