Mick Hartley

Things aren’t getting any better in Zimbabwe:

Inflation in Zimbabwe has reached such proportions that it destroyed the value of a new national currency before a single one of its banknotes had been spent.

The world’s highest inflation rate, which rose to a record 1,594 per cent yesterday, rendered the new money worthless before it could be distributed. Mounds of banknotes — all paid for in scarce hard currency — are lying unused in warehouses. […]

Rather than release a currency whose largest banknote [Z$1000] is roughly the value of one tomato, the Reserve Bank in the capital, Harare, simply stockpiled the useless money.

At present, prices in Zimbabwe are doubling roughly every 30 days. By next month, the new currency’s largest banknote will be worth about half a tomato. […]

Inflation began accelerating after Mr Mugabe’s regime crippled commercial agriculture — Zimbabwe’s biggest export earner — by seizing white-owned farms. Having disabled the engine of the economy and destroyed its tax base, the government resorted to printing money to pay its own bills.

This boosted inflation and drove down the value of the currency. Prices soared in 2005 when Mr Mugabe repaid Zimbabwe’s debts to the International Monetary Fund. The Reserve Bank accomplished this feat by the simple expedient of printing about Z$21 trillion.

Last week 180,000 civil servants, who had their salaries trebled in January, demanded another increase of 400 per cent. This would keep their earnings slightly above one US dollar (52 pence) per day — the internationally accepted measure of absolute poverty. But the value of a 400 per cent pay rise will be wiped out within four months.

Meanwhile, the regime has announced that it will spend £600,000 on national celebrations of Mr Mugabe’s 83rd birthday on Feb 21. Zimbabwe’s general public are being asked to make donations.