Zimbabwe -- Mugabe rules out devaluation of currency despite crisis

SAPA-AFP via SABC News (SA) ^ | June 30, 2002

[Clive]

The Zimbabwe government has ruled out devaluation of the country's volatile currency despite a foreign exchange crisis that has rocked the country for years, the state-run Sunday Mail said.

The paper said a special cabinet committee on finance and economic affairs chaired by President Robert Mugabe last week threw out a proposal by the country's central bank and finance ministry to devalue the Zimbabwe dollar. "The Reserve Bank and the Ministry of Finance officials were told that what they were proposing was untenable," an unnamed source told the paper. "The officials had inexplicably failed to come up with a complete package to address the foreign currency situation," said the source.

Zimbabwe has for almost three years experienced an acute foreign exchange shortage when vital imports of fuel, electricity, basic foodstuffs and other commodities have to be paid for. The Zimbabwe dollar had been officially fixed at 55 to the greenback for nearly two years yet on the black market last week it traded for over 800 units to the US dollar. Government officials say the black market rate is due to a proliferation of bureaux de change and unofficial moneychangers.

Farmers and industrialists have been crying out for devaluation, but the government has been reluctant. The government last devalued the currency in August 2000 by 24%. While economists believe devaluation would encourage exports and prevent pending massive job losses, external debt servicing and imports become more expensive in a country where inflation is running at over 122%.

Zimbabwe is mired in its worst-ever economic crisis, with inflation last month officially pegged at 122,5%, unemployment levels over 60% and the critical lack of foreign currency. International donors suspended aid more than two years ago and tourism has suffered a slump.

The tobacco sector - which earns a third of the country's desperately needed foreign exchange - has not had any significant impact on the foreign currency availability in the country since annual sales opened in May. - Sapa-AFP

[Clive]

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[arete]

Farmers and industrialists have been crying out for devaluation, but the government has been reluctant. The government last devalued the currency in August 2000 by 24%. While economists believe devaluation would encourage exports and prevent pending massive job losses, external debt servicing and imports become more expensive in a country where inflation is running at over 122%.

Zimbabwe is mired in its worst-ever economic crisis, with inflation last month officially pegged at 122,5%, unemployment levels over 60% and the critical lack of foreign currency. International donors suspended aid more than two years ago and tourism has suffered a slump.

So, what has changed?

Richard W.

[Clive]

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[Calvin Locke]

"The Reserve Bank ... were told that what they were proposing was untenable,"

And destroying your agricultural ability isn't?

[Nuke'm Glowing]

Gee, I wonder what group of suckers taxpayers will be required to pony up the funds to keep this commie in power.


IN case you are wondering, go look in the mirror.