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Pressure increases on Mugabe
22/06/2007 14:49 - (SA)
Harare - Zimbabwe's currency plunged to
new depths on Friday as the US ambassador to Harare predicted
galloping inflation will force President Robert Mugabe from
office before the end of the year.
The Zimbabwe dollar, which is pegged to the US dollar and
was effectively devalued by the central bank to 15 000 to the
greenback in April, was trading in the 170 000 - 200 000 range on
the thriving black market on Friday.
Just a week before, the black market exchange rate was about
95 000 to one US dollar, and 2 500 to one in January.
Once a regional bread basket, Zimbabwe has suffered chronic
food shortages since 2001 and is gripped by an economic crisis
critics blame on Mugabe's controversial policies such as the
seizure of white-owned farms to resettle landless blacks.
In an interview with the British Guardian newspaper, US
ambassador Christopher Dell said Mugabe's government was
effectively "committing regime change on itself".
"I believe inflation will hit 1.5 million percent by the end
of 2007, if not before," he said. "I know that sounds
stratospheric but, looking at the way things are going, I
believe it is a modest forecast."
Economic analysts said the latest plunge of the Zimbabwe
dollar was largely due to public fears that inflation would only
get worse coupled with speculation that the Central Bank itself
was now purchasing foreign currency on the black market to
finance agriculture and other projects, although this could not
be independently confirmed.
Mugabe - Zimbabwe's sole rule since independence in 1980 -
has accused the southern African country's opposition and
Western countries of plotting to unseat him and has been accused
by critics of a draconian crackdown on political opponents.
On Friday, Zimbabwe's High Court ruled that hearings in the
case of five men accused of plotting to topple Mugabe would be
closed to the public and the media - the latest sign of
political tensions gripping the country.
Central bank warning
The defiant leader, 83, has said he will stand for
re-election after his current term ends next year and denies
allegations that his government has committed human rights
abuses.
The fall of the currency prompted central bank head Gideon
Gono to warn that authorities could soon crack down on illegal
foreign currency trading.
"It has become inevitable to fully crack the whip on those
institutions and individuals who are willfully breaking the
banking, anti-money laundering and exchange control laws," Gono
said in comments carried by the official Herald newspaper.
Prices of fuel and basic consumer goods have risen sharply
over the past two weeks, with the Consumer Council of Zimbabwe
saying the cost of living for an average family of six has
almost doubled in one month.
Official figures released by the Central Statistical Office
show that prices doubled within one month in April, with the
monthly inflation figure topping 100%.
The state agency is yet to present May data, but analysts
put the year-on-year figure above 4 500% and expect the
trend to continue.
Eight successive years of recession has left four out of
five Zimbabweans without jobs and many struggle to feed their
families, a situation analysts say could further stoke political
tensions.
"People have completely lost faith in the currency and that
means they have lost faith in the government that issues it,"
said Dell, who is close to the end of his posting to Zimbabwe.
"Things have reached a critical point. I believe the
excitement will come in a matter of months, if not weeks. The
Mugabe government is reaching end game, it is running out of
options."
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