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Last Updated: Friday, 31 August 2007, 12:47 GMT 13:47 UK
Mugabe bans pay and price rises
President Robert Mugabe
Mr Mugabe has brought the new rules in unilaterally
Zimbabwean President Robert Mugabe has banned all pay rises and price increases in a new bid to curb the country's runaway inflation.

With Zimbabwe's annual inflation now at more than 7,600% - the highest in the world - the latest move was announced by the state-run Herald newspaper.

Anyone who breaks the freeze, which applies for six months, will get a jail sentence of up to the same length.

Shops have previously been told to cut prices, but most have little to sell.

'Pushing down inflation'

"No one in private or public sectors can now raise salaries, wages, rents, service charges, prices and school fees..." said the Herald.

I just wonder when they will try and reverse the laws of gravity, because this does not work
John Robertson, economist

The changes have been made by Mr Mugabe without going before the Zimbabwean parliament.

The decree has to be confirmed within six months to remain in force.

Any pay increases can now only be authorised by the government's National Incomes And Prices Commission, which the president heads.

"The net effect of the charges will be to push inflation down since all increases will be by less than the current inflation rate," added the Herald.

Independent Harare-based economist John Robertson said the latest move was a result of plummeting government revenues.

"I just wonder when they will try and reverse the laws of gravity, because this does not work," he said.

A Zimbabwean holds up a new 200,000 dollar note (2 August 2007)
Zimbabwe launched a 200,000 note this month

Mr Robertson also questioned whether the country's armed forces - which have so far been loyal to Mr Mugabe - would accept the pay freeze.

Other analysts predicted that the wage and prices freeze would be impossible for the government to implement.

Once the bread basket of southern Africa, Zimbabwe's economy is now in crisis.

The economic woes date back to 2000, when the government and its supporters began to forcibly seize white-owned farms.

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