Zim economic crisis (28-06-07)

Saddled with a new currency that cannot be introduced due to the hyper-inflationary environment, the Reserve Bank of Zimbabwe Governor, Gideon Gono, is considering knocking another three zeros off the country's currency in the next 45 days.

Central bank sources are even saying t

hat the governor is contemplating the removal of five zeros instead.

So bad is the situation that the RBZ printing press is reportedly running overtime printing a new set of bearer cheques to replace the ones introduced last August and billed to expire at the end of July.

Plans by government to introduce a new currency, printed at a cost of 16,5million euros last year have been put on hold. The new currency is set to take a back seat till things stabilize at a date in the distant future.

Most Zimbabweans now measure their salaries by the number of 2litre bottles of cooking oil they can buy. Prices of commodities go up every three hours.

The price of a 2litre bottle of cooking oil went up by 812,5percent in two weeks while prices of soft drinks and beer shot up by 4000 percent since January. A 300ml bottle of coke now costs $50 000, while a pint of beer is a staggering $75 000.

A shirt costs $15 million, while a pair of shoes is now worth $20 million. A litre of petrol topped this week at $200 000.

Last week commercial banks complained that their systems were compromised and faced imminent collapse as most Zimbabweans had been reduced to a non-banking public. – CAJ News

RBZ forex plot
The Reserve Bank of Zimbabwe (RBZ) has been buying foreign currency from the black market to purchase food and other basic requirements ahead of next year’s elections in order to reduce the severity of economic problems on party supporters.
Highly-placed sources told The Zimbabwean the plot was aimed at reducing pressure on the economy ahead of the elections, which the ruling party will campaign on the slogan, “Reviving the Economy and Shaming our Detractors”.
RBZ Governor Gideon Gono did not respond to questions sent on this and other matters last week. However, some of the agents being used by the RBZ, who include top government officials, confirmed to this paper that the central bank is offering more than the black market rate for forex, in some cases by more than double.
“We are selling huge amounts of money to the RBZ and there is now a well established network through which this is being done,” one of the agents said. “We go through some well-established persons because it is not easy to just go to the RBZ without the necessary connections.”
Government sources revealed a plan by the Mugabe regime to flood the market with cheaper fuel, foodstuffs as well as other commodities in the run up to the elections after using the foreign currency from the RBZ. The ruling party hopes to exploit this populist opportunity by pretending to be fixing the economy, whilst at the same time projecting the propaganda that the opposition MDC has been responsible for the meltdown through calling for sanctions. – Itai Dzamara

Dollar must devalue
Zimbabwean industrialists have urged President Robert Mugabe’s government to immediately devalue the local dollar, saying such a move would ease a foreign currency shortage that threatened businesses with collapse.
“The problem of foreign currency shortage has hit industry hard, resulting in some businesses collapsing or being pushed to the verge of collapse,” Callisto Jokonya told delegates at the launch of Confederation of Zimbabwe Industries’ 2006 manufacturing survey last week.
“The free market economy is the most efficient way for millions of people to have their needs met at the lowest possible cost. The freer the market, the more vibrant the economy and the greater the quantity of wealth and opportunity that is created for more people,” added the CZI president. – Chief Reporter

Tax free threshold raised

The Zimbabwe government, fearing massive protests from the country’s desperate workforce, has increased the tax-free threshold by more than 1500 percent.
Samuel Mumbengegwi, the Finance Minister, said this week government had increased the tax free threshold from $100 000 to $1.5 million with effect from July.
This comes weeks after the Consumer Council of Zimbabwe (CCZ) said the cost of living for a low income family of six for the month of May shot up by 65.6 % from April.
Mugabe has defended his policies, including the controversial land reform programme, saying it was necessary to correct colonial-era imbalances. Critics have hit out at his declared intention to run for President again next year, plans saying the country’s economy cannot afford more years of his rule. – CAJ News

Post published in: News

Leave a Reply

Your email address will not be published. Required fields are marked *