Gono admits inflation over 2000%
By Tererai Karimakwenda
26 April, 2007

“Bulawayo has never before seen so many luxury motor vehicles!” That was the first comment given by Eddie Cross, the Policy Coordinator for the Tsvangirai MDC and also a businessman in Bulawayo. He was talking about the function he attended on Thursday at the large City Hall, where Reserve Bank governor Gideon Gono announced his new monetary policy review.

Cross described the venue as “magnificently decorated” and criticized Gono and his colleagues at the RBZ for being too extravagant when the country was struggling. He estimated it must have cost about Z$500,000 to decorate each table. As for the new policy, Cross said Gono introduced new funds and bonds that essentially devalue Zimbabwe’s currency but without changing the official exchange rate. He also admitted there was now hyper-inflation driving the economy.

Tea, snacks and cool drinks were served at the tables, which were draped in white linen and had beautiful flowers. Cross said the girls in the foyer were also beautifully dressed but he dismissed it all saying it was completely unnecessary. He said: “It was a typical example of the culture of the Reserve Bank. The stuff on my table must have cost at least Z$500 000 plus the cost of table cloths and the linen covers for all the chairs. The total bill must come to many millions.”

The Reserve Bank Governor introduced several new measures which Cross said will all be meaningless in a month or so when inflation forces prices to go up drastically and new measures will be needed again. He admitted there is a food crisis and the government had ordered about 500 000 tonnes of grain. Cross believes this is most likely coming from South Africa.

Over all, Gono criticised the government for price controls, urged the country to negotiate a social contract with labour and business and called for every one to work together to get the country out of the difficulties it was in. He actually admitted the inflation rate was at 2,200 per cent in March and this meant the country was now into hyper inflation territory.

Cross dismissed this saying experts have always said inflation is even higher than that and is most likely above 4000%. He also believes the devaluation might help business in the short term, but within months this measure would be swept away by the inflation.