Zimbabwe...inflation tops 1000%

[samsonyuen]

From: news.bbc.co.uk/1/hi/business/4765187.stm
_______________
Zimbabwe's inflation tops 1,000%

The poor state of the economy is having an effect on infrastructure
Zimbabwe's inflation rate has surged past the 1,000% mark signalling that the African country is struggling to keep its economy functioning normally.
The annual rate of price growth was 1,042.9% in April, the Central Statistics Office (CSO) said, having risen 129 percentage points from March.

It means average goods are about 11 times as expensive in April 2006 as they were 12 months earlier.

Zimbabwe is suffering from shortages of food, fuel and foreign currency.

President Robert Mugabe blames domestic and foreign enemies for the problems.

Many analysts put the responsibility firmly at the ruling party's door, claiming the government made the situation worse when it seized control of land owned by white farmers, which triggered a sharp drop in production and exports of agricultural goods.

Crumbling

Zimbabwe is a country that is blighted by crumbling urban infrastructure.

There are regular water and power cuts, while the cost of everyday foods has surged.

&nbsp &nbsp &nbsp &nbsp
ZIMBABWE BREAD PRICES

December 2004: Z$3,500
(3 US cents)
August 2005: Z$7,500
(7 US cents)
December 2005: Z$44,000
(43 US cents)
March 2006: Z$65,000
(64 US cents)
May 2006: Z$80,000
(79 US cents)

Surviving on a low income

A loaf of broad now costs between Z$80,000 - Z$110,000 (79 US cents - $1.08) up from about Z$7,500 (7 US cents) last year, when the price was controlled by the government.

A carton of orange juice costs about Z$500,000 and a kilo of beef up to Z$1m.

"Business quotations are not valid for more than two days," an office manager in Harare told the BBC News website.

"Actually I have one in front of me which says it is valid for 24 hours. Prices can literally double overnight," she said.

In January, the government introduced a Z$50,000 "bearer cheque" worth 49 US cents, to become the highest value currency note.

It is not enough to buy a copy of the daily Herald newspaper at Z$80,000.

Housing, education and transport costs also have jumped, while the unemployment rate means that almost two out of every three Zimbabweans are out of work.

The country is struggling to pay civil servants and is thought to owe money to neighbours such as South Africa and Mozambique from whom it is been importing electricity and fuel.

The latest inflation data was to have been released on Wednesday, but the announcement was postponed, which only led to further panic about the economic crisis.

The International Monetary Fund (IMF) and other international bodies are calling for reforms, but Mr Mugabe is unwilling to accept outside help or interference.

 

[scarberiankhatru]

In 1914 Germany, a loaf of bread cost 13 pfennig...by 1923, a loaf of bread cost 80 billion marks.

 

[Observer Walt]

^ This is usually accepted as one of the reasons why Hitler had popular appeal in Germany, after many years of economic chaos.

Unfortunately for Zimbabwe they already have their despot in place. Seems to be a basket case.

 

[samsonyuen]

From: www.iht.com/articles/2006.../zecon.php
__________________
Zimbabweans ask, who can afford houses?

By MacDonald Dzirutwe Reuters

MONDAY, MAY 15, 2006



HARARE, Zimbabwe Although Zimbabwe is suffering an economic meltdown that critics attribute to President Robert Mugabe's government, real estate is booming as people hedge against the world's highest inflation rate, now above 1,000 percent.
Harare real estate listings offer everything from old colonial houses built among rolling hills through modern, urban apartments to semidetached houses in low-income townships.
"Investors delight! 8 acre estate, 4 bedrooms, 2 bathrooms, kitchen and laundry, bar and a cottage," one advertisement says. The asking price is 80 billion Zimbabwe dollars, or about $800,000 on the official market and $372,000 at black market rates.
A "priced to sell quality and superb 5- bedroom home with a family bath, large living area, fitted kitchen, pool and sauna and delightful gardens" in the leafy suburb of Chisipite will cost 45 billion dollars, almost twice the asking price at the start of the year.
Analysts say housing are another sign of Zimbabwe's upside-down economy and a currency that is losing its value faster than any other on earth.
"The reason for this boom, if one can call it that, is a result of demand, but there is also an inflationary aspect as the market adjusts in line with the depreciation of the Zimbabwe dollar," said Boysen Mutembwa, managing director at BARD Real Estate in Harare.
Once one of Africa's most promising economies, Zimbabwe has endured over five years of turmoil while being accused by Western countries and local opposition parties of political repression and economic mismanagement by Mugabe, the country's only ruler since its independence from Britain in 1980. He denies responsibility for the ailing economy and accuses the West, led by Britain, of sabotage in retaliation for seizures of land from white commercial farmers.
The government has acknowledged that inflation is one of its biggest hurdles in trying to reverse an economic slide that is raising fears of popular protest.
Annual inflation rose to a record 1,042.9 percent in April, surging into four figures for the first time. The economic crisis is also accompanied by shortages of foreign currency, fuel and food and rising unemployment.
At the official exchange rate, house prices rose 30 percent to 80 percent in the first quarter of 2006, depending on location, and more than 2,000 percent in a year. But in U.S. dollar terms, BARD Real Estate has estimated, Harare house prices lost as much as 16 percent over the past year as the Zimbabwe dollar tumbled - although this was still a better performance than almost any other local investment.
"In the long term, property is a better hedge against currency depreciation than any other asset," BARD said in a recent report on the market.
Industry officials say the crisis has slowed construction of commercial and residential properties, fueling demand.
Real estate agents say the sector is driven by a few individuals and companies, as well as by some of the estimated three million Zimbabweans abroad, who sell foreign currency at double the official rate on a thriving black market to buy houses at home.
The central bank has set up a program for people in the diaspora who take out Zimbabwe-dollar loans to buy or build property and repay in foreign currency at interest rates prevailing in their countries of residence. The program has attracted some foreign exchange inflows, but many people abroad still process their hard cash on the black market.
Companies tend to invest in the property market for capital appreciation rather than rental income, but people do it mostly for speculation or as a hedge against inflation, said an official at the real estate company Redfern Mullett.
Analysts say last year's slum-demolition campaign, which left thousands of people homeless, has also helped increase property prices and rentals.
"Certainly the government clean-up exercise has contributed," said John Robertson, an economist in Harare, "not only to the rise in rentals but in terms of demand for houses and in low- income areas. It has pushed up prices."
The Central Statistical Office said recently that rents, which real estate agents now review on a quarterly basis instead of twice a year, were a major factor in the rising inflation.
For Zimbabwe's urban majority, the runaway prices signal an end to dreams of home ownership. A two-bedroom house in the crowded township of Highfield costs 3 billion dollars. Mortgage lending companies provide only half the total cost, at an interest rate of 65 percent to 75 percent a year.
Joseph Mukonori, 41, who lives in Highfield, said he earned a monthly income of 8 million dollars.
"So tell me," he said, "how many years I have to work to save for a house."

 

[scarberiankhatru]

"Joseph Mukonori, 41, who lives in Highfield, said he earned a monthly income of 8 million dollars.

Wow...everyone in Zimbabwe is a millionaire! They must all be happy.

What happens to loans when inflation is insanely high like this?

 

[rbtaylor]

This is usually accepted as one of the reasons why Hitler had popular appeal in Germany, after many years of economic chaos.

The election itself went to all extremes from the centre.

In Canada, it would be a like having the Canadian Action party win the election followed closely by the Green Party, Marxist-Leninist, and Christian Heritage parties.

 

[samsonyuen]

From: au.news.yahoo.com/060806/19/101kb.html
________________________
Sunday August 6, 01:56 PM
Zimbabwe's 'cosmetic' cash reforms rapped

HARARE (AFP) - Zimbabweans last week flooded banks to hand in old notes after the central bank slashed three zeroes from the local currency, but analysts said the new money would not provide relief from record inflation.
Zimbabwe's Reserve Bank slashed three zeroes from its currency last Monday to help consumers battling with bundles of money on shopping trips which can cost billions and trillions of local dollars.

The change, which ushered in a new currency, is also aimed at compelling individuals and companies to bring in billions of dollars stashed away in safes and combatting a burgeoning black market in currency, central bank chief Gideon Gono said.

Since Monday state television has been screening an advertisement in which an ecstatic housewife hails the currency change saying a loaf of bread which cost 200,000 Zimbabwe dollars "now costs only 200 dollars."

Independent economist John Robertson told AFP: "The currency change is a purely cosmetic exercise which won't overcome the problems facing the country.

"It will only work as far as reducing the volumes of bank notes people will carry but it does not provide solutions to the main problems of inflation, lack of investment and high unemployment."

Best Doroh, an economist with a leading bank, said the currency change "does not entail an immediate reduction in the prices of goods and services.

"Availability of basic commodities will also not necessarily improve. Inflationary pressures will most likely remain alive in the economy."

Zimbabwe is in the throes of an economic crisis characterised by world-record inflation hovering over 1,000 percent, high unemployment and chronic shortages of foreign currency and basic goods like fuel and cooking oil.

At least 80 percent of the population lives below the poverty threshold often skipping meals and walking or cycling long distances to work as they battle to stretch income to the next pay-day.

Economist Eric Bloch lauded fiscal and currency reforms introduced by Gono, however, saying they would reap rewards in the long run.

"The benefits will not come overnight," Bloch said. "But the government must refrain from printing money and financing its projects. The governor also did well to remove subsidies which have contributed greatly to inflation."

Zimbabwe started printing high denomination bearer cheques, a bank note equivalent, following cash shortages which saw banks running out of cash and customers waiting long hours for cash deliveries.

As hyper-inflation struck, millions became "millionaires" overnight carrying wads of notes to buy groceries.

The central bank gave a 21-day ultimatum to hand in the old bearer cheques and imposed thresholds on amounts that can be deposited in banks in an apparent crackdown on hoarders.

Those found with cash exceeding the limit will have to reveal the source or forfeit the money and face prosecution for money laundering.

Shopowners have also been barred from accepting cash payments of more than 100 million Zimbabwe dollars (400 US dollars) for goods and services.

Critics say the currency reforms were a psychological ploy to hoodwink ordinary Zimbabweans into believing prices had gone down.

"The government wants to create the impression that goods are cheaper which is not the case," said a taxi driver in central Harare.

A Harare-based economic thinktank, KM Financial Solutions, said unless President Robert Mugabe's government changed its economic policies, the country would keep on playing with the currency.

"One also hopes that the government will be able to fuel the functioning of the economy since most of the fuel was being financed by black market dealers," another analysts said.

The government blames the country's economic woes on sanctions imposed by western countries four years ago while its critics say the economic downturn is a result of corruption and mismanagement.

 

[EnviroTO]

In Canada, it would be a like having the Canadian Action party win the election followed closely by the Green Party, Marxist-Leninist, and Christian Heritage parties.

I can understand the Marxist-Leninist and Christian Heritage party extremes but I'm not sure on what scale the Green Party or Canadian Action party is an extreme. Pro-environment anti-environment?

 

[samsonyuen]

From: news.bbc.co.uk/1/hi/business/5252072.stm
_______________________
Zimbabwe sets 21-day price freeze

Zimbabwe has embarked on a three-week price freeze, as part of wider plans to strengthen the country's weakened economy, state media have reported.
The news follows a decision by central bank governor Dr Gideon Gono to lop three zeroes off the Zimbabwe dollar.

The freeze was needed because some firms had used the measure to hike the cost of goods unilaterally, reported Zimbabwe's Sunday Mail.

The move comes amid soaring inflation, which has hit record levels.

Opposition

The freeze started on 1 August and runs to 21 August, when the old bank notes will cease to be legal tender.

"No trader, manufacturer, wholesaler, dealer or retailer of any commodity" will be able to increase the price of the commodity "by any amount", Zimbabwe's industry and international trade minister Obert Mpofu told the Sunday Mail.

Local firms say they need to raise prices to counter inflation, which - at about 1,200% - is the highest in the world.

City-based Zimbabweans have suffered significantly in the face of fuel, food and electricity shortages, as well as poor infrastructure, in the wake of inflation.

Following the new currency initiative, Dr Gono has been threatened by those opposed to the plan, the government-owned Daily Herald reported.

"Let me warn those that want to derail our economic recovery programme that they will be arrested," minister of state for national security Didymus Mutasa told the newspaper.

 

[adma]

In Canada, it would be a like having the Canadian Action party win the election followed closely by the Green Party, Marxist-Leninist, and Christian Heritage parties.

Actually, a closer approximation might be some cross btw/ the 1952 B.C. Social Credit victory and the 1990 Ontario NDP victory. (And no, I'm not trying to "Godwin" anyone.)

 

[Abeja de Almirante]

It's amazing how quickly Zimbabwe went from being the breadbasket of southern Africa to a basket case. It never seemed wise to me to confiscate the arable land from successful, productive and skilled farmers and give it to unskilled, unproductive folks. Regardless of skin colour of those on either side, this must have seemed a recipe for disaster. Now the successful and skilled farmers have fled with their expertise and whatever wealth they could carry to continue their lives elsewhere, leaving the country poorer.

IIRC, one of South Africa's concerns after the end of apartheid was that the folks with skills, expertise and wealth (i.e. whites, and South Asians) would flee the country, resulting in millions of poor folks looking for food and prosperity, and finding nothing but hunger and anger. That the upper and middle classes have for a large part remained in South Africa is a demonstration of a positive method of bridging past wrongs and setting the stage for a positive future.

 

[Observer Walt]

The threatening comments from Mr. Mutasa, in particular, must sound like an eerie echo of pogroms etc. for those who have read their history. This country seems to be determined to drive out anyone who has any ability (ie., anyone who would pose a threat to these tinpot despots). It won't be too much longer until they hit rock bottom. What a shame, for the ordinary people (the huge majority) who would simply want to live some kind of a normal and decent life.

 

[Abeja de Almirante]

There doesn't seem to be a single country in Africa that is a well run, thriving democratic state. You can only blame your past and outsiders for so long, before looking inward and wondering what the heck is wrong here.

 

[samsonyuen]

^^^I'm not so sure about that. There is a huge South African population in London . The (white) South Africans I've spoken to are quite pessimstic about the situation there. I've heard that it discriminates against them, crime's up, etc. Perhaps not the established adults, but more and more young White South Africans are going to the UK if they have the chance.

 

[ganjavih]

There doesn't seem to be a single country in Africa that is a well run, thriving democratic state. You can only blame your past and outsiders for so long, before looking inward and wondering what the heck is wrong here.

Many parts of Africa were European colonies until very recently. Expecting everything to settle and thriving democracies to be established within a few years is not realistic. I believe Spain only became a democracy in the 1970s and it wasn't occupied by any foreign power... what was its excuse? Why did it take so long?