Zimbabwe\u2019s finance minister responded to the country\u2019s worsening economic crisis last week by blacking out inflation statistics for the next six months, boosting the price of the little power that\u2019s available five-fold and admitting what the International Monetary Fund told him in April: the economy will contact for the first time since 2008.<\/p>\n
At the same time he spoke of fiscal surpluses and a relaxation in local ownership requirements for the key platinum industry.<\/p>\n
This all happened in a country with daily power cuts of up to 18 hours and shortages of everything from bread to motor fuel. People are receiving food aid in cities for the first time and a drought has necessitated the import of hundreds of thousands of tons of corn.<\/p>\n
When Robert Mugabe was ousted after four decades in power in late 2017 his replacement, Emmerson Mnangagwa, promised economic regeneration and declared that Zimbabwe is \u201copen for business.\u201d<\/p>\n
Instead things have gone from bad to worse with the effects of rapidly expanding money supply through the sale of Treasury bills under Mugabe\u2019s rule coming home to roost and this year\u2019s outlawing of the U.S. dollar in favor of a local quasi currency that can\u2019t be traded outside the country causing panic.<\/p>\n
\u201cZimbabwe is at a tipping point and if it falls over the edge it\u2019s going to be quite a long way in coming back,\u201d said Derek Matyszak, a Zimbabwe-based research consultant for South Africa\u2019s Institute for Security Studies. \u201cThe wheels are falling off. There is no way out of a Ponzi scheme other than a massive infusion of cash to pay off your creditors.\u201d<\/p>\n
The country with the world\u2019s highest inflation rate after Venezuela also suspended annual consumer-price data for the next six months. The authorities need to collect comparable data since the introduction of the new currency in February. That marked a return to 2009, when the country abandoned the Zimbabwe dollar in favor of the U.S. dollar and other currencies after inflation surged to an estimated 500 billion percent.<\/p>\n
If the more commonly used black-market exchange rate is used, Zimbabwe\u2019s annual inflation is currently 558%, about three times the official rate, while Venezuela\u2019s is 35,004%, according to Steve H. Hanke, a professor of applied economics at the John Hopkins University in Baltimore.<\/p>\n
Scrapping the official annual rate is \u201cno real loss from an analytical perspective,\u201d said Jee-A van der Linde, an economist at NKC African Economics in Paarl, South Africa. \u201cThese elevated inflation readings did little more than create panic and damage what little confidence was left.\u201d<\/p>\n
Still, the decision evokes other countries in crisis. Venezuela halted publication of inflation data and while it periodically releases figures, it isn\u2019t operating on a regular schedule. In 2013, Argentina was censured by the IMF for tampering with its data.<\/p>\n","protected":false},"excerpt":{"rendered":"
Zimbabwe\u2019s finance minister responded to the country\u2019s worsening economic crisis last week by blacking out inflation statistics for the next six months, boosting the price of the little power that\u2019s available five-fold and admitting what the International Monetary Fund told him in April: the economy will contact for the first time since 2008. At the […]<\/p>\n","protected":false},"author":84,"featured_media":10762,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,7],"tags":[350,83,31,28],"class_list":{"0":"post-11994","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-all-news","8":"category-files","9":"tag-article","10":"tag-economy","11":"tag-mnangagwa","12":"tag-mugabe"},"yoast_head":"\n