Posted on 02/20/2006 1:55:42 PM PST by vikingd00d
HARARE - Economic experts on Monday predicted that the final collapse of Zimbabwe's long ailing economy was nigh after President Robert Mugabe confessed that his government had discarded the economics rule book and was printing money to guarantee its political survival.
Besides the obvious push-up effect on inflation, the decision to ignore basic economic rules will scare away the few investors still interested in doing business in Zimbabwe while also dissuading the International Monetary Fund (IMF) and Western donors from providing financial assistance - vital to any efforts to revive the economy, the experts said.
Speaking during a televised interview last Sunday night to commemorate his 82nd birthday, Mugabe said he would continue printing more money, a move he said was necessary because accepted economic principles and monetary rules did not apply to Zimbabwe's economic crisis.
Mugabe turns 82 today.
But Harare-based consultant economist John Robertson said Zimbabwe will pay dearly for the government's decision to ignore economic rules.
He said: "The President may have the power to order his government to ignore the rules but in economics there are severe penalties to pay for such behaviour - economies collapse because people disobey the rules."
Robertson said the Harare administration's chances of redeeming itself as a democratic government guided by sound economic principles and worthy of international support were fast fading by the day, adding that Mugabe's comments were only helping stick the badge of "rogue regime" on his government.
An economist with a commercial bank in Zimbabwe's second largest city of Bulawayo concurred with Robertson saying: "In essence, what the President is saying is that he does not want to play by the accepted rules of the game and that given a chance he would want to do things that are at tangent with the IMF even against advice from his own officials."
The bank economist, who did not want to be named for professional reasons, said Mugabe's comments were "the clearest sign yet that unless there is a complete change of direction, the total collapse of Zimbabwe's economy will be a reality sooner than most people expect."
Defending his stance to ignore accepted economic principles and conduct, Mugabe said his government had no option but to keep the printing machines running in order to be able to feed hungry Zimbabweans, a quarter of whom require urgent food aid after poor harvests last farming season.
The veteran President, whom critics hold responsible for ruining Zimbabwe's once vibrant economy because of repression and wrong economic policies, castigated his Ministry of Finance for wanting to implement "bookish" economics that he said cannot work in Zimbabwe.
Respected University of Zimbabwe business lecturer, Anthony Hawkins, said Mugabe's utterances would damage investor confidence and help fuel the country's inflation, already among the highest in the world.
Zimbabwe's annual inflation was pegged at 613.2 percent in January from 585.5 percent recorded the previous month and is seen approaching 1 000 percent in the next three months.
"It will also drive up the price of foreign currency especially if that money (being printed by the government) is used to buy foreign currency," Hawkins said.
Zimbabwe is facing a serious shortage of foreign currency, which is blamed for shortages of fuel, food, electricity and agricultural inputs because there is no hard cash to pay foreign suppliers.
Mugabe's televised birthday address comes about two weeks after a team from the IMF completed a mission to Harare, during which they told the Zimbabwean authorities to adopt economic policies that conform to international best practice.
Among its recommendations was the need for the central Reserve Bank of Zimbabwe (RBZ) to discontinue its quasi-fiscal activities that were cited as fuelling money supply growth and high inflation.
The RBZ has been dolling out large sums of money to largely ruling ZANU PF party supporters without proper monitoring strategies in place.
RBZ governor Gideon Gono also shocked the business community last week when he revealed that he had to print Z$21 trillion to purchase the foreign currency that was used to settle Zimbabwe's arrears to the IMF. - ZimOnline
Hey! I have an HP PhotoSmart printer....
Why haven't I thought of this before?
Oh Yeah! 30 Yrs Federal Prison.
Love that quote!
I wish our own worthless political class would figure out that you can't repeal the law of supply and demand by legislative fiat anymore than they can repeal the law of gravity!
I don't know how anyone deals with inflation at 1000% except to go to a barter economy.
Even Mugabe's supporters can't be liking this.
(not to jeopardize possible employment in the next Clinton Administration)
The sooner the place is depopulated, the better.
I look forward to Mugabe being roasted alive by his hungry people.
Well, I have $100...I think I will buy the whole country and burn it just for fun!
Don't believe that ... just wait for "I cannot recall" Clintoon to chime here!
"You can evade reality as much as you like, but you can not evade the consequences of evading reality."
I wish the "liberals" in our own country and the rest of so called Western civilization could and would learn this fact of life and heed it.
The liberals always think words and good intentions are reality.
When they try and tell you that there is no objective truth, ask them which airline they fly on and what holds the planes up in the air, good wishes or the laws of aerodynamics and physics?
Then ask them again where they want to place their faith or illusions.
I see an RNC Ad in the making.
Excellent article!
To think that Zimbabwe was considered the breadbasket of Africa only 30 years ago. What a shame that so many innocents are dying as a result of Mugabe's evil.
Will Uncle Hugo Chavez float Mugabe a loan ?
I cannot wait for Mugabe to meet his maker. At least he will go down in history as the man who ruined his country, killed and starved millions and stole the land of people who fed the country and made it prosper.
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