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Zimbabwe's annual inflation rate - already the world's highest - has soared to 231,000,000%, newly released official figures for July show. The rise - from 11,200,000% last month - was largely due to increases in the prices of bread and cereals. A landmark power-sharing deal between President Robert Mugabe and opposition leader Morgan Tsvangirai has failed to ease the country's economic crisis. Meanwhile, the UN says it needs $140m for food aid over the next six months. The UN World Food Programme estimates that two million people are in need of food aid, and that the figure will rise to 5.1 million - or 45% of the population - by early 2009. "Millions of Zimbabweans have already run out of food or are surviving on just one meal a day - and the crisis is going to get much worse in the coming months," said WFP official Mustapha Darboe. The inflation figures are from July - before the power-sharing deal - but reports from Zimbabwe suggest that the prices of many goods has continued to shoot up, while the value of the Zimbabwe dollar is plummeting.
Zimbabwe: A Fresh Start
By Alf Field
Nov 11 2009 9:30AM
In February 2009 Zimbabwe was the only country in the world without debt. Nobody owed anyone anything. Following the abandonment of the Zimbabwe Dollar as the local currency all local debt was wiped out and the country started with a clean slate.
It is now a country without a functioning Central Bank and without a local currency that can be produced at will at the behest of politicians. Since February 2009 there has been no lender of last resort in Zimbabwe, causing banks to be ultra cautious in their lending policies. The US Dollar is the de facto currency in use although the Euro, GB Pound and South African Rand are accepted in local transactions.
Price controls and foreign exchange regulations have been abandoned. Zimbabwe literally joined the real world at the stroke of a pen. Money now flows in and out of the country without restriction. Super market shelves, bare in January, are now bursting with products.
I recently visited Zimbabwe in the company of a leading Australian fund manager. As a student of monetary history, I was interested to see what had happened to a country that had suffered hyperinflation. How did the people cope? How is the country progressing now? The current Zimbabwean situation is complicated by the fact that President Robert Mugabe is determined to stay in power whatever the cost.
The first part of this article deals with economics, the hyperinflation and current situation, which is a picture of recovery and potential vigorous growth. The second part deals with politics, both the historical aspects as well as current developments, which are extremely fluid.
We were fortunate to have private interviews with the Prime Minister, Morgan Tsvangirai, and a wide range of business leaders. This provided a quick picture of Zimbabwe past and present.
It's very difficult for the Zimbabweans to do anything because half the population is on food aide (~5 million) and thousands dying from cholera.
Mugabe needs to be removed from power, but that won't happen when the African union get caught up in his propaganda, deceit and lies.
The situation in Zimbabwe is what makes me so angry at those who claim their governments (USA) are out to get them...How deluded to you have to get?
Since the implementation of the most recent land reforms, only 300 of 4,500 commercial farmers remain on farms. The eviction of the mostly white farmers has been partly blamed by critics and aid agencies for Zimbabwe's worst famine in living memory, which left about two-thirds of the 11.6 million people facing severe food shortage.
Post-2000 land reform have been disastrous for the economy of Zimbabwe. Prior to land redistribution, land-owning farmers, mostly white, had large tracts of land and utilized economies of scale to raise capital, borrow money when necessary, and purchase modern mechanised farm equipment to increase productivity on their land. As the primary beneficiaries of the land reform were members of the Government and their families, despite the fact that most had no experience in running a farm, the drop in total farm output has been tremendous and produced widespread claims by aid agencies of starvation and famine. However, Mugabe's expulsion of the international media has prevented full analysis of the scale of the famine and the resultant deaths. What is not in dispute is that a country once so rich in agricultural produce that it was dubbed the "bread basket" of Southern Africa, is now struggling to feed its own population. A staggering 45 percent of the population is considered malnourished. Foreign tourism has also plummeted, resulting in tens of millions of dollars a year in lost revenue.