- The Washington Times - Wednesday, May 17, 2006

JOHANNESBURG — Profligate printing of money by the government of President Robert Mugabe has driven inflation in Zimbabwe to an annual rate above 1,000 percent, adding to the misery of its already impoverished people.

Some analysts have likened the growth in money over the past four years to the ill-fated Weimar Republic in Germany after World War I, during which wheelbarrow loads of cash were needed to buy groceries.

More than two years ago, it had reached a point at which the face value of the highest denomination bank note in circulation was just half what it cost to print it. As a result, the government began issuing reusable “bearer checks,” or “BCs,” to pay the army, police, teachers and other state workers.

The checks have a maximum value of 50,000 Zimbabwean dollars — equal to about 50 cents. Early versions carry an expiration date of December 2005, but have not been withdrawn.

Figures obtained by The Washington Times show that, in the 12 months ending in January 2006, the government printed BCs with a face value of 11 trillion Zimbabwean dollars.

That is more than 350 times the 30 billion Zimbabwean dollars of printed currency that was in circulation in 2002. And John Robertson, an economist in Zimbabwe, says the amount may double again by the end of next month.

“It’s the proverbial vicious cycle,” Mr. Robertson said yesterday. “As prices rise day by day, workers are unable to cope, so wages go up. And in order to meet government salaries, the Reserve Bank prints more notes, which drive up inflation, leaving people worse off than before.”

When Mr. Mugabe came to power in 1980, Zimbabwe’s currency was stable, with one Zimbabwean dollar valued at $1.60. At the close of business yesterday, banks in the capital, Harare, were offering 100,000 Zimbabwean dollars to one U.S. dollar, and the black market rate was double that.

Mr. Mugabe blames the economic collapse on a Western conspiracy put in place after his decision six years ago to confiscate land from 4,000 white farmers and give it to rural blacks.

His critics, including most international human rights groups and the State Department, counter that his increasingly despotic regime has caused a flight of skilled workers and investors.

Earlier this year, the government said that most of the former white-owned farms that were confiscated now are lying idle. Ministers and members of Mr. Mugabe’s family have been accused of using the best properties as weekend retreats.

Like thousands of Zimbabwean traders, Gladys Masuku buys food and other goods in neighboring South Africa and sells it in the southern Zimbabwean city of Bulawayo.

“There is so little food back home and, when it comes on the shelves, people can’t afford it,” she said yesterday as she began her return journey.

“And I no longer take money from people to buy goods in South Africa. By the time I get back, maybe two or three days later, the local price can have doubled, and I am out of pocket,” she said.

“Instead, I pick up the things they want, and I pay for them myself. Then we negotiate a price when I get back. That’s if I can find enough foreign currency to make the trip.”

A quarter of Zimbabwe’s 14 million people are estimated to have left the country, and money that they send home has replaced tobacco, maize, mining and tourism as the nation’s largest source of income.

But money sent through banks or Western Union must be exchanged at the official rate, which is only half that offered on the black market. So money flows largely through private channels, bringing no relief from the crippling shortage of hard currency.

As traditional investors in Europe, the United States and South Africa withdrew from Harare, Mr. Mugabe went in search of new friends, first to the Middle East, then to Malaysia, and most recently, to China. But last week, several Chinese firms froze operations in Zimbabwe, citing nonpayment of debt.

The national carrier, Air Zimbabwe, also has fallen behind on paying for two Chinese-built jets, and a third has been grounded for lack of spare parts.


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