Inflation out of control as experts predict collapse

By Tererai Karimakwenda
19 August 2005

Apparently there was no trading on the Zimbabwe Stock Exchange (ZSE) on Wednesday and Thursday because there were no buyers and sellers were left with untradable shares in their hands. Reports say this was apparently in response to a new and unexpected 10 percent withholding tax announced by finance minister Herbert Murerwa on Tuesday. Whatever that means, it is clear that the economy has reached a critical breaking point and something must give.

Bulawayo businessman Eddie Cross believes there is no economic solution that will control the runaway inflation rates we are experiencing. He said monthly inflation rates combine to make an annual rate of 2000% and this is not sustainable. The finance minister also put a cap on annual salary increments that is impossible to maintain, and Cross said this is the edge of real collapse.

He has not been able to buy fuel in Zimbabwe dollars for over 4 months and the only way to get it now is with hard foreign currency. Cross said the government needs at least US $800 million for food imports alone as about 5 million Zimbabweans are faced with starvation. The answer to Zimbabwe's economic crisis according to Cross, will have to involve changes in the political situation.