Mnangagwa says new tax necessary pain for Zim recovery

However business and citizens objected, saying they would be paying for the government’s profligate spending.

Economic analysts said the tax would raise nearly $2bn annually.

Oil companies temporarily stopped delivering fuel because of the impact of the tax, causing shortages. The price of some basic goods and medical drugs have shot up in the last few days.

To improve the economy, the government would have “to take measures that are going to be painful and this is one of such measures”, Mnangagwa told a business meeting in Harare. “In our quest to leapfrog and cover the period of two decades of stagnation, these things have become necessary.”

A 388-page government economic plan released by finance minister Ncube on Friday shows the government plans cuts in spending, borrowing and the amount it spends on the civil service. The report also outlines plans for privatisation and the closure of state-owned firms, among several other reforms to improve the economy.

Zimbabwe is facing acute shortages of US dollars, which the country adopted in 2009 when it abandoned its own currency after hyperinflation made it worthless.

The shortages have fanned a black market where the premium for dollars increased to more than 200 percent on Monday, up from 165 percent on Saturday.

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