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Zim inflation: 100 000% seen
31/07/2007 21:40 - (SA)
Harare - Prices in Zimbabwe could be 1 000 times higher at the end of this year than they were at the beginning, the IMF predicted on Tuesday.
Once the breadbasket of southern Africa, Zimbabwe's economy is crippled by acute food, fuel and foreign currency shortages.
"If recent monthly trends continue, (International Monetary Fund) staff projects that year-on-year inflation could well exceed 100 000% by year-end," Abdoulaye Bio Tchane, director of the IMF's Africa department, told Reuters in an interview in Maputo.
Zimbabwe already has the world's highest inflation rate, now officially running above 4 500%, although analysts believe the figure to be double that. Critics blame the policies of President Robert Mugabe, including the seizure of thousands of white-owned farms.
Hundreds of business people and traders in Zimbabwe have been arrested and fined for overcharging or failing to display prices, but the price blitz has worsened shortages of most basic goods such as the staple maize-meal, cooking oil, meat and sugar.
"Economic prospects are bleak: (IMF) staff projects that gross domestic product will continue to contract in 2007 and inflation will spiral higher," said Bio Tchane.
"Price controls are likely to exacerbate shortages and ultimately fuel further inflation."
The central bank said it would issue higher denominated bank notes on Wednesday to help consumers cope with hyperinflation.
Mubage, 83, has remained defiant despite the growing crisis, accusing opponents and Western powers of plotting to oust him.
His government lopped off three zeroes from the local currency a year ago in its struggle against inflation.
In a statement on Tuesday, the Reserve Bank of Zimbabwe said a Z$200 000 note would come into circulation from August 1. Currently, the highest banknote in circulation is Z$100 000.
The new note is worth one US dollar on Zimbabwe's black market for foreign currency and about $13 at the official rate.
Mugabe has been in power since independence from Britain in 1980. Rights groups say his security forces have beaten, tortured and in some cases killed opposition activists.
Last week, US Assistant Secretary of State for African Affairs said Washington is looking at deepening sanctions against Mugabe and his supporters but will continue to provide humanitarian aid.
- Reuters
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