Johannesburg/Harare - The Reserve Bank of Zimbabwe (RBZ) governor was on collision course Wednesday with his boss President Robert Mugabe after he announced that price controls introduced by Harare last year are counter-productive.

In a monetary statement review, RBZ governor Gideon Gono said the price controls which Mugabe's government introduced last June as a way of fighting the hyperinflation were contributing to the shortages of the basic commodities and affecting production of the goods.

"They (price controls) must be used with extreme caution, otherwise they sink many basic goods and make them out of sight in the formal market and only appear in the parallel market where they will be out of reach of the majority of the people," Gono said.

"Price controls undermine economic activities. While I understand the social welfare responsibility of the government, there must be mutual trust between government and business.

"There must a suitable formula (to replace price controls) and not to thumb sack prices that are sometimes wild and not related to cost of production. That will not make us move as a nation."

In the past Gono has clashed with the finance ministry for interfering in the fiscal policy. He said on Wednesday he would continue to interfere in "any area of the economy."

Zimbabwe is experiencing its worst economic path for almost a decade now, with the highest inflation in the world estimated to be over 165,000 per cent and over 80 per cent unemployment rate.

The once prosperous nation is now experiencing acute shortages of essentials such as foreign currency, maize, cash, fuel, medical drugs and electricity.

In the same statement Gono said there must be a "radical reforms" in order for the country to get out of its economic quandary. "There is a need for decisive and bold actions on critical areas such as fuel, daily price increases, under utilised land and foreign currency," said Gono.

He said he wanted the mining and agriculture industry to increase production tenfold for the economy to get back on track. The RBZ would be repossessing all farming implements that it gave to farmers who are not utilising them.

On trying to ease the foreign currency shortages - mainly caused by a pegged exchange rate and decline in exports - Gono said he would be introducing a managed "willing buyer-willing seller" system. (dpa)