Government says inflation now 2.2 million percent
By Tichaona Sibanda
16 july 2008

The country’s official inflation rate hit 2.2 million percent on Wednesday. Reserve Bank Governor Gideon Gono revealed the new figures in Harare but a respected economist believes the rate could be as high as 15 million percent. Zimbabwe’s annual rate of inflation is the highest in the world.

Moffat Nyoni, head of the Central Statistical Office, confirmed the figure but said it was only a rough barometer as it was based on limited data. Economist John Robertson said inflation was largely being driven by the collapse in the black market value of the Zimbabwe dollar against the US dollar, which sets the pricing for imports of food and other goods.

Analyst Bekithemba Mhlanga said the new figures were now meaningless: ‘These are statistics that confirm the economy has completely collapsed. The economy has gone beyond reasonable repair. What the world is witnessing now is the disintegration of that collapse,’ said Mhlanga.

He added; ‘In a state of decay, you still go through a process of those things actually rotting. This is the position we’ve reached now.’

The country’s economic collapse has spectacularly accelerated since the sham one-man election that saw Mugabe contesting against himself in the presidential run-off, after MDC leader Morgan Tsvangirai pulled out citing violence against his supporters.

Mhlanga said government had shown little sign of coming to grips with it’s mounting economic problems. He said both Mugabe and Gono appeared unable to stem the economic slide, which has turned one of Africa’s most promising economies into a basket case, with serious shortages of food, fuel and foreign exchange. The MDC accuses Gono of fuelling the crisis by printing floods of new cash and subsidising struggling state-run firms.

Reports from Harare said hyperinflation has also caused a cash shortage because the government cannot print notes fast enough to meet demand. Ordinary people are permitted to draw only Z$100 billion (36p) a day from their banks.

The government has made an exception for soldiers, fearing unrest in the military. They are allowed to take out Z$1.5 trillion a day and the cash is delivered by the banks to the barracks. ‘The way the economy is now, people will continue to be impoverished, people will continue losing their jobs, continue losing their purchasing power.

Government can’t stop it. Until they restore the rule of law and order, sort out the issue of governance and constitutionality, no solution, no mechanism by Gono or anybody else will stop the current economic disaster,’ Mhlanga said.