Zimbabwe\u2019s finance minister responded to the country\u2019s worsening economic crisis last week by blacking out inflation statistics for the next six months, boosting the price of the little power that\u2019s available five-fold and admitting what the International Monetary Fund told him in April: the economy will contact for the first time since 2008.<\/p>\n
At the same time he spoke of fiscal surpluses and a relaxation in local ownership requirements for the key platinum industry.<\/p>\n
This all happened in a country with daily power cuts of up to 18 hours and shortages of everything from bread to motor fuel. People are receiving food aid in cities for the first time and a drought has necessitated the import of hundreds of thousands of tons of corn.<\/p>\n
When Robert Mugabe was ousted after four decades in power in late 2017 his replacement, Emmerson Mnangagwa, promised economic regeneration and declared that Zimbabwe is \u201copen for business.\u201d<\/p>\n
Instead things have gone from bad to worse with the effects of rapidly expanding money supply through the sale of Treasury bills under Mugabe\u2019s rule coming home to roost and this year\u2019s outlawing of the US dollar in favor of a local quasi currency that can\u2019t be traded outside the country causing panic.<\/p>\n
\u201cZimbabwe is at a tipping point and if it falls over the edge it\u2019s going to be quite a long way in coming back,\u201d said Derek Matyszak, a Zimbabwe-based research consultant for South Africa\u2019s Institute for Security Studies.<\/p>\n
\u201cThe wheels are falling off. There is no way out of a Ponzi scheme other than a massive infusion of cash to pay off your creditors.\u201d<\/p>\n
The country with the world\u2019s highest inflation rate after Venezuela also suspended annual consumer-price data for the next six months. The authorities need to collect comparable data since the introduction of the new currency in February.<\/p>\n
That marked a return to 2009, when the country abandoned the Zimbabwe dollar in favor of the US dollar and other currencies after inflation surged to an estimated 500 billion percent.<\/p>\n
If the more commonly used black-market exchange rate is used, Zimbabwe\u2019s annual inflation is currently 558%, about three times the official rate, while Venezuela\u2019s is 35,004%, according to Steve H. Hanke, a professor of applied economics at the John Hopkins University in Baltimore.<\/p>\n
Scrapping the official annual rate is \u201cno real loss from an analytical perspective,\u201d said Jee-A van der Linde, an economist at NKC African Economics in Paarl, South Africa.<\/p>\n
\u201cThese elevated inflation readings did little more than create panic and damage what little confidence was left.\u201d<\/p>\n
Still, the decision evokes other countries in crisis. Venezuela halted publication of inflation data and while it periodically releases figures, it isn\u2019t operating on a regular schedule. In 2013, Argentina was censured by the IMF for tampering with its data.<\/p>\n
A de-linking of the country\u2019s quasi-currencies from parity with the US dollar in February and the re-imposition of the Zimbabwe dollar overnight in June has fueled depreciation with the currency officially trading at 9.28 to the dollar on Aug. 2.<\/p>\n
The black-market rate was 10.8, according to Marketwatch.co.zw, a website run by analysts. While the government has argued that in the face of foreign-currency shortages it has no choice but to reintroduce its own currency, Hanke disagrees.<\/p>\n
\u201cThe Achilles heel is the introduction of the new currency to the exclusion of the dollar,\u201d he said.<\/p>\n
\u201cThey have decided to go in the completely opposite direction and claimed it\u2019s the best thing since sliced bread and it\u2019s going to be an absolute disaster.\u201d<\/p>\n
While the cost of basic services has climbed 400% this year, pay rises have been around 10%, said Japhet Moyo, secretary-general of the Zimbabwe Congress of Trade Unions, which has 130,000 members.<\/p>\n
Finance Minister Mthuli Ncube tried to highlight the country\u2019s first positive current-account balance in a decade as a sign of progress. Since his appointment last year, the government has sold only marginal amounts of Treasury bills.<\/p>\n
And earlier this year, the Cambridge University-trained economics professor forecast that month-on-month inflation, which surged to 39.3% in June, would be close to zero by year-end.<\/p>\n
The fundamental problem is that the government has failed to attract significant investment and hasn\u2019t substantially changed the policies of the Mugabe era, said John Robertson, an independent economist in Harare, the capital.<\/p>\n
\u201cPeople are very angry\u201d and even though a quarter of the population has already emigrated, more may follow, said Matyszak.<\/p>\n
\u201cThe Zimbabwe I once loved has become a cemetery for my son\u2019s future\u201d said Ashley Randen, an unemployed single mother of a 12-year-old boy in Harare.<\/p>\n