Mthuli Taken To Court Over Inflation Figures
11 October 2019
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FINANCE minister Mthuli Ncube has been dragged to the High Court by National Social Security Authority (Nssa) employees who, in conjunction with members of the Zimbabwe Pension and Insurance Rights Trust (ZimPIRT), are seeking an order to declare as unconstitutional, null and void his unilateral decision to ban annualised inflation figures.

In his mid-year budget review and supplementary budget presented in the National Assembly on August 1 this year, Ncube announced that with immediate effect, the publication of figures for annualised inflation by the Zimbabwe National Statistics Agency (ZimStat) would be suspended for a year until February 2020.

Annualised inflation rate is the percentage change in prices from one year to the next, or year-on-year.

In a joint High Court challenge filed through their law firm, Tendai Biti Law, the Nssa Workers’ Union (Nssawu) and ZimPIRT said Ncube’s decision was illegitimate, illegal and unconstitutional.

Nssawu is acting through its president Joseph Chimhanda, while Martin Tarusenga is standing for ZimPIRT in his capacity as the organisation’s general manager.

Ncube was cited as the first respondent, while ZimStat was cited as the second respondent in the application, filed at the Masvingo High Court on September 30.

In their founding affidavit, the applicants argued that the decision by Ncube was irrational and was neither supported by law nor logic.

They also stated that by so doing, Ncube was in violation of Section 10:28 of the Administrative Justice Act, which prohibits ministers from interfering in administrative affairs of statutory institutions as well as the Census and Statistics Act.

The applicants further accused Ncube of banning annualised inflation figures out of embarrassment and as a means to cover up for government’s failure to address issues that drive inflation.

They further submitted that his decision offended the principle of good governance and transparency which are codified in the constitution of Zimbabwe.

Nssawu, on its part, argued that it derived its locus standi from the fact that it negotiates employee salaries annually, with primary considerations being inflation and the consumer price index as derived from annualised inflation figures.ZimPIRT said because of the move, it was

unable to calculate pension values, which will result in pensioners significantly losing out.“The applicants’ grounds of review are that the first respondent is irrational and not supported by the law or logic. The decision is grossly unreasonable such that no reasonable person properly applying his mind would have arrived at the same. The decision is in any event illegal, illegitimate and not supported by any provision in any law, in particular in the Census and Statistics Act. In any event, the decision of the first respondent offends the principles of good governance and transparency codified in the Constitution of Zimbabwe,” court documents read.

“The first applicant is a trade union duly registered according to the laws of Zimbabwe whose key function is to represent its members, the employees of Nssa. Its core business is to engage and negotiate with the employer on conditions of service, in particular wage negotiations. In these negotiations, the issue of inflation is critical.”

The applicants further argued that Ncube’s decision was a violation of Zimbabweans’ constitutional rights since the concerned statistics are classified as a public good which is critical for household and corporate budget planning.

“At a high level, statistics are used in many ways by individuals, government, business and academics. Inflation statistics impact on everyone in the same way as they affect interest rates, tax allowances benefits, pensions, savings rates, maintenance contracts and many other payments,” court documents read.

“The general public uses consumer price statistics to understand the impact of inflation on their personal and household budgets and understand incomings and outgoings linked to inflation (such as taxes, benefits, pensions, wages and other costs) are likely to change. By banning year-on-year inflation figures, Zimbabweans have been deprived of the ability to plan their lives for periods beyond a month.”

The applicants also argued that Ncube’s decision to ban publication of year-on-year inflation figures has seen many pensions not being adjusted in line with actual inflation and, as such, many such pensions have been arbitrarily deemed worthless and removed from the books by pension administrators not adequately informed and guided about inflation in Zimbabwe, which the minister has caused.

“In so arbitrarily removing such pensions from the books, such pensioners have been prejudiced of thousands of RTGS$ in savings that they made over periods averaging 25 years. Without the year-on-year inflation figures and related statistical information, pension funds are unable to determine how much they need to set aside in order to be able to pay the increased pensions for as long as the pensioners are alive, and to pay pension benefits for other categories of pension fund members,” the documents further read.

The applicants also argued that Ncube’s ban, effected without consulting key stakeholders, has adversely affected interest rates since they are premised on annualised inflation figures.

They further argued that by banning the publication of the inflation figures, Ncube erroneously ensured that the economy in Zimbabwe is void of interests and thus unable to assess the opportunity cost of holding the RTGS dollars. Pensioners and other economic actors are in these circumstances prejudiced.

They further argued that since businesses, in their planning, require data on annual inflation in order to determine their cost and pricing structures, annualised inflation assists businesses in ascertaining real trends in production, sales, purchases, profits and other values.

In addition, since inflation is a key determinant of the cost of capital as measured by interest rates, businesses which have to make key investment decisions were being prejudiced.

“The decision therefore to ban the publication of data on annualised inflation is clearly an emasculation by the minister of key obligations of the second respondent (Zimstat). The Census and Statistics Act (section seven) makes it clear that operations of the agency shall only be controlled by the board and no one else.

“The first respondent’s decisions assault the functions of the board and indeed the second respondent of promoting and protecting the credibility, integrity and partiality of official statistics. We contend that the first respondent, the minister, has no power or right to interfere with the professional independence of the agency,” the lawyers argued. Zimbabwe Independent