Mad Money
Zimbabwe inflation on course for 1,000%

18^th July 2003

Zimbabwe's powerful labour movement has called on President Robert Mugabe and his entire cabinet to resign as inflation soared from 300% to 364,5%.

Inflation is on course to reach the 1,000% peak predicted by many economists by the year-end.

Zimbabwe Congress of Trade Unions (ZCTU) secretary-general Wellington Chibebe said his organisation was appalled by Mugabe's failure to implement measures to ease the economic crisis, which had now led even to a shortage of Zimbabwe dollar notes.

Finance Minister Herbert Murerwa recently vowed to reduce inflation to 100% but economists said this was impossible.

"If it were any other democracy the entire government would have resigned for presiding over the mess that this economy is in," Chibebe's statement said.

Because of the shortage of banknotes, he said, many employers were not paying cash to workers who are paid weekly.

Those paid in cheques were unable to access their salaries, as the banks were limiting withdrawals to Z$5,000 a customer - not enough to buy a 5kg bag of mealie meal.

Paydays had become a nightmare, with workers having to queue for hours at banks, Chibebe said.

The government had failed to pay salaries for June to many civil servants because of the shortages of notes.

Economists say the 364,5% official inflation rate understates inflation, as it is based on official prices rather than the parallel market.

Most of the goods on the Consumer Price Index, used to calculate the inflation rate by the Central Statistical Office, are in fact available only on the parallel or black market, at prices far higher than those charged by registered retailers.

Economist John Robertson said projections by the International Monetary Fund that the inflation level would end the year at 500% now looked very optimistic.

The rate would reach the 1,000% mark this year, even if the government continued calculating it using official prices for commodities.

The Cape Argus (SA)