Currency Collapses

5th November 2002

Harare - Zimbabwe could face economic meltdown this year unless its government acts to end the economic crisis that has seen the country's currency collapse in the last fortnight, according to the International Monetary Fund (IMF).

Just two weeks ago Zimbabweans were paying Z$750 for an American dollar on the black market. On Monday, after a fortnight of freefall, a staggering Z$1 600 was needed to buy US$1 - and it is expected that the beleagured currency will fall further.

Meanwhile, the IMF has predicted that inflation could rise to 522 percent next year. IMF country representative in Zimbabwe Gerry Johnson said on Monday: "You're moving into a situation where it could go much higher than that. Once you get to that point, it can go very fast."

With prices rising daily, businesses selling imported goods have stopped advertising prices. One computer company's adverts simply say "$ Call next to items for sale".

Beef prices rose 100 percent overnight And in supermarkets the price of imported goods like butter last week doubled, reflecting the fall of the Zimbabwe dollar against the rand.

Zimbabweans now pay up to Z$160 for R1 as foreign currency-starved businesses clamour for anything they can get.

And it's not just imported goods that double in price. On Monday beef prices rose 100 percent overnight, anticipating a shortage caused by the slaughter of three-quarters of Zimbabwe's commercial beef herd.

The slaughter, forced by the eviction of thousands of white farmers, will turn Zimbabwe from the region's most famous beef exporter into a net importer of beef within a year, say industry insiders.

Movement for Democratic Change economic affairs spokesperson Eddie Cross said the meltdown had been "engineered by the ruling Zanu-PF party".

"In 22 years, the life expectancy of our people has declined 22 years on average. We have gone from being a net exporter of food to being dependent on imports for 75 percent of what we need to survive." 

IOL Foreign Service - By Beauregard Tromp