Money Wise

Zimbabwe's millionaires worth only $1


October 20, 2007

Zimbabwe's millionaires worth only $1

Zimbabwe’s currency has fallen to record levels, with one million Zimbabwean dollars buying a single US dollar (48p) and inflation reaching 8,000 per cent.

The bleak data was announced as people in the capital Harare struggled to cope without electricity for the third day. “We closed our business today,” said a woman who helps to run a major petrol supplier. “We just can’t operate like this.”

The National Blood Transfusion Services said that it had been unable to test blood since Tuesday. “We are in serious trouble,” said a doctor.

At independence in 1980, the Zimbabwean dollar held parity with the US dollar but the currency has suffered from the recent economic policies of President Mugabe; at the beginning of this year it was $Z2,800 to one US dollar and ten days ago $Z500,000.

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President Mugabe has struggled to keep inflation under control and in July ordered businesses to halve their prices to alleviate the country’s woes. The order resulted in the arrest of about 10,000 business people as thousands of police officers raided companies, shopping malls and markets to take goods marked above price control levels. Now the supermarkets are bare and it is almost impossible to buy food.

Although the inflation rate slowed marginally in August it rose to 7,982 last month, according to official statistics, which are regarded as highly conservative. “It shows the lunacy of their belief they can legislate against inflation and bring it down at the barrel of a gun,” said Rob Davies, an economist.

Officials in Mr Mugabe’s ruling party reportedly expect him to sign a law that will force all foreign-owned companies, including local subsidiaries of Barclays and Standard Chartered, to sell 51 per cent of their equity to black Zimbabweans.