nister of Finance Herbert Murerewa demonstrated, yet again, his government’s continuing myopic perceptions of the economy’s future. While acknowledging that 2006 had been yet another year of economic decline, and of pronounced hyperinflation to all-time record heights, he once again ascribed the decline to the speciously and spuriously alleged “illegal” economic sanctions.
Suffering?Sorry,I’m staying! You ain’t seen nothing yet
Sanctions against Zimbabwe, as against some of its ruling Party hierarchy, are minimal in extent, and have in no manner occasioned the ongoing devastation of the economy. The economic emaciation of the economy commenced in late 1997, and is now continuing into its 10th year. In contradistinction , such limited sanctions as exist, of insignificant economic consequence, if any, were initiated only a few years ago.
The reality is that the decimation of the economy is wholly attributable to government’s gross mismanagement, its dogmatic adherence to the principles of a command economy, instead of the provenly successful approach of market forces driving economic policy, its catastrophically disastrous approach to land reform, and the consequential near-total destruction of Agriculture , its immense profligacy, and much else.
But, being absolutely unable to admit to, and acknowledge, fault, Government continuously seeks to dupe the population that the Government is blameless, and the economic ills are solely due to the diabolically evil, malicious, and unjustified actions of the European Union, in general, and of the United Kingdom, in particular, aided and abetted by the malevolent USA.
However, the populace is not so easily duped. Most are very aware that whilst they struggle desperately to survive, on incomes far below the Poverty Datum Line (PDL), the political hierarchy, and those well-connected and close to that hierarchy, are living “on the fat of the land”. They live in palatial residences, drive fleets of luxurious vehicles, travel endlessly on shopping trips to Dubai, Beijing, Malaysia, Teheran, and elsewhere where they can travel unhindered, and indisputably go without nothing whatsoever as they may desire.
But the average Zimbabwean now struggles to feed himself and his family adequately, to house himself and his dependents in even barely tolerable premises, and pay for utilities into those premises, to meet costs of child education, and of healthcare, and fund other absolute essentials. Most, even if amongst the fortunate minority as have gainful employment, cannot even afford transport to and from their places of work, but must walk very considerable distances daily.
And, as 2006 ground on, inflation surged upwards, rising from 585,8% (Year-on-Year) in December, 2005 to 1098,8% in November, 2006, according to the Central Statistical Office (CSO), although in reality inflation had risen to at least 1200%, if not more.
(It is not that CSO falsifies inflation data, but nevertheless the data is incorrect, in that CSO uses State-dictated “controlled” prices, whereas the populace has to source scarce commodities in the “Black” Market, at markedly higher prices, and because the consumer spending basket” on which CSO determines the inflation rate no longer realistically reflects the pattern of spending of the average consumer, for most necessarily expend their limited resources on the most critically needed essentials.
However, despite Minister Murerwa’s optimistic prophecies for 2007, inflation is set to soar upwards at a gargantuan pace over the months ahead. Although it will probably not reach the megalithic level of 4279% projected by the International Monetary Fund (IMF), nevertheless the annual rate of inflation is likely to exceed 2000% within the next few months. Most prices will double over the first two months of the year, and again in the next following two months.
Zimbabwe’s hyperinflation is driven by diverse factors, but amongst the most pronounced causes is the immense scarcity in foreign exchange. On the one hand, the parlous non-availability of foreign currency repercusses very negatively upon productivity, and the lesser volumes of production have to cover fixed costs, with consequential unit cost escalation . On the other hand, most imports are funded through the unlawful “Parallel” market and with endless increases in costs of purchasing foreign currency in that market, due to the intensifying inadequate availability, import costs are surging upwards.
Concurrently, inflation is itself a major stimulant to inflation, for much of Commerce and Industry determines prices with regard to expected levels of inflation, wage and salary demands are linked to inflation, and parastatals constantly seek price escalations aligned to inflation. Yet another major contributant to inflation is excessive governmental spending, mainly funded by recourse to the domestic money market. The 2007 Budget reflected very little substantive endeavour to contain State expenditure.
Zimbabwe continues to have a monolithic governmental infrastructural, including a vastly excessive number of Ministers, Deputy Ministers, Senators and Parliamentarians, requiring a massive supportive organization, AN inconceivably large Public Service, and defence forces of a size inexplicable for a country allegedly at peace with all its neighbours. All this fuels yet further great, and crippling, inflation.
These are but a few of many of the triggers of Zimbabwe’s hyperinflation, the highest in the world! And very little, if anything, is yet being done to address any of the triggers with conviction and substance. The PDL for a family of six is now in excess of Z$300 000, and rising exponentially, but per capita income is less than one-third of PDL. With the inflation that lies ahead in the immediate future, intensifying poverty, malnutrition, ill-health, and intense misery, for most Zimbabweans, is inevitable.
Post published in: Economy