Posted on 03/20/2007 2:42:57 PM PDT by Clive
Inflation to hit 5 000 percent mark this year: IMF
Monday 19 March 2007
By Justin Muponda
HARARE – Zimbabwe’s economic crisis will heighten further in the coming months with inflation breaching the 5 000 percent mark by year-end as President Robert Mugabe battles to contain a deep recession that is seen destabilising the region, a senior IMF official said.
International Monetary Fund Africa (IMF) Director Abdoulaye Bio-Tchane said Harare had shown little signs of coming to grips with its damaging economic problems, promising more hardships as political tensions escalate.
"It depends on how much the people in the country can take," Bio-Tchane was quoted by the international media as saying.
"The question is how far it could fall. The last four years we've seen GDP falling by more than 35 percent. Inflation is running at more than 1 700 percent and our estimate is by the year's end, it could move even beyond 5 000 percent."
Bio-Tchane spoke as Mugabe's government drew international outrage for assaulting in police custody Movement for Democratic Change (MDC) leader Morgan Tsvangirai and other opposition officials who were violently stopped from attending a prayer rally in Highfield.
The United States and Britain, which Mugabe accuses of punishing his government and plotting his downfall, have led the chorus of condemnation and threatened to tighten sanctions further against the Zimbabwean leader and his inner circle.
Bio-Tchane said Mugabe and central bank chief Gideon Gono - whose name has been thrown around as his potential successor - appeared overwhelmed by the crisis, which has plunged the former food basket of southern Africa into a basket case, surviving on aid and imports.
He accused Gono of fuelling the crisis by widening the budget deficit to around 40 percent of GDP this year, through printing cash and generous subsidies to loss-making parastatals.
"They need to rein this in," said Bio-Tchane. "But obviously they need more than that. You can't let the economy function if people are not free to operate, if their rights are not secured, including human rights."
"You will always find a few people who will benefit from this system, so therefore it may continue. I can't give a date when the whole thing will stop or collapse.
“But it will certainly continue falling. This will continue impoverishing people, people will continue losing their jobs, continue losing their purchasing power,” he said.
Bio-Tchane spoke as the country’s currency continued to depreciate rapidly on the black market, where the bulk of trade is now being handled. The US dollar fetched 16 000 Zimbabwe dollars at the weekend, compared to 10 000 last week.
There is a new wave of Zimbabweans fleeing the country for better paying jobs abroad, in a move reminiscent of the year 2000, as people attempt to escape rising political violence and a haemorrhaging economy.
"It's holding the sub-region back, and it is holding the whole Africa region back," he said. "This was a booming economy, this was a net exporter of goods and services in the past. Now exports are falling. It is a country that is a net importer today."
He added that it appeared some countries were helping to bankroll Mugabe through loans or other deals.
"We don't have evidence of the sources, but clearly they are getting some financing," he said.
Western countries, including the IMF and World Bank, have halted aid to Mugabe over policy differences. Mugabe, now 83 and Zimbabwe’s sole ruler since independence in 1980, has turned to Asia for help, with little success. - ZimOnline
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I think I'll buy a few million zimbabwe dollars and wait for their economy to return to normal. I'll be rich!
Ah, the predictable magnificence of socialism.
This makes no sense. The government is causing the inflation, therefore, how can one say that "Mugabe is battling to contain a deep recession"?
Under Mugabe Marxism, they will be eating each other, like in North Korea.
Of course this is this is what the MSM thinks the US economy is doing.
5000% inflation? this must be the rate of inflation my cable company is using...
Inflation at the same time as recession is stagflation, which is a total mystery to PhD economists and central bankers, because it doesn't fit their model of how economies work.
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