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Zimbabwe
inflation hits 100,000%
MacDonald Dzirutwe, Reuters
February 20, 2008
http://www.reuters.com/article/bondsNews/idUSL2045892620080220?sp=true
Harare - Zimbabwe's
annual inflation surged to over 100,000 percent, marking another
setback to President Robert Mugabe's efforts to reverse a deep economic
slide ahead of general elections next month.
The southern African
country holds presidential, parliamentary and council elections
on March 29, and the economic meltdown is seen as a major issue
to voters.
Mugabe has made the battle
against inflation the cornerstone of his government's bid to end
the country's economic rot, which many critics blame on mismanagement
and his controversial policies, including seizures of white-owned
farms.
Last year his government
ordered businesses across the country to freeze the price of milk,
bread, cooking oil and other basic goods in a bid to halt runaway
prices that have devastated the lives of millions of Zimbabweans.
Data from the
state-run Central Statistical Office (CSO) on Wednesday showed annualised
inflation was rising fast, breaching the psychologically important
six-figure mark from 66,212.3
percent in December.
On a monthly basis inflation
rose to 120.8 percent compared to 240.1 percent in December.
The data came amid a
presidential election campaign that sees Mugabe, who turns 84 on
Thursday, facing the first serious challenge to his rule since coming
to power after independence from Britain in 1980.
"It is now clear
that this government has lost the inflation battle and this latest
figure, as official as it is, shows the extent of damage that official
policies have inflicted on the economy," Joh Robertson, a Harare-based
economist said.
Analysts say
Mugabe, who all along looked set for an easy re-election, could
face a stiff challenge
from former ally Simba Makoni. He still has to contend with old
rival Morgan Tsvangirai, who leads the main opposition party.
But Zimbabweans seem
to have long become used to frequent price hikes of basic goods
while grappling with shortages of foreign currency, fuel, food,
water and electricity.
Black market trade is
flourishing and has become a major source of income for many people
left jobless by an eight-year recession.
The Zimbabwe dollar for
example, which is officially pegged at Z$30,000 to the United States
dollar, was trading at Z$2.6 million against the greenback in early
January at the thriving parallel market but on Wednesday US$1 fetched
Z$12 million.
The central bank was
forced to issue high-value notes amid a bank note shortage between
December and January but the highest denomination 10 million Zimbabwe
dollar bill -- worth $333 at the official exchange rate but only
$0.83 on the black market -- buys just two loaves of bread and is
rapidly losing value.
Salaries for most government
employees range from 200 million to 500 million Zimbabwe dollars,
far too little to take the workers through the month.
Analysts said workers
were too afraid to confront Mugabe's government, fearing a heavy
crackdown from security forces who have been used to crush dissent
in the past.
Mugabe denies ruining
one of Africa's most promising economies and says it has been sabotaged
by Western nations that have imposed sanctions on Zimbabwe as punishment
for his land reforms.
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