Sunday, September 17, 2006

Inflation Rise In Zimbabwe

Zimbabwe inflation at 1,200 pc
Source - CNN.Com

In Zimbabwe, the annual inflation rose to a record of 1,204 percent at the end of August. This is up from 993 percent for July. Zimbabwe has the highest inflation rate in the world. It is suffering a great economic crisis; there is a shortage of food, gasoline, and hard currency and unemployment is at a record high. Some of the highest increases last month were in taxes, school fees, and medical products.

The majority of Zimbabwe’s population lives below the poverty line. The average family of five makes around $80 a month and the official poverty line rose to $401 last month.

The Zimbabwe Reserve Bank chief Gideon Gono had to resort to desperate measures in order to restore order to the country. He decided to basically remove the last three digits from the currency. This means that 100,000 Zimbabwe dollars are now 100 Zimbabwe dollars.

Critics say that Zimbabwe’s current situation is the result of overspending during the 1990’s and a breakdown of property rights; there has been a seizure of almost 5,000 white-owned farms for redistribution to black Zimbabweans. Much of the seized farmland was among the most productive and has been left damaged and dilapidated.


Should Zimbabwe have considered other methods of land redistribution that would have lessened the economic impact of the redistribution program?

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