Zimbabwe Business Watch : Week 48
The expected deadline of November 22nd, by which time all importers were instructed to costs at the bank rate, did not materialise. There was an awkward announcement that the media had incorrectly stated the position, the exact words of the government official.
More of the same and worse greeted the business community this week but most prominently, a shortage of cash has bogged down this component of business and economic activity. With money supply alone growing at over 19 000% per month, at a time when permitted cash withdrawals remain static, it has all but dried up cash. Premiums for notes have risen to as high as 40% as businesses, currency traders and the informal sector grapple with the crisis.
The Governor of the RBZ is becoming more and more threatening with his language and talks about his war against the parallel market, the mainstay of the economy.
Currency rates have gone through the roof with the US$ now trading in a band from over $3 million to $4 million:1 and, the speed at which the $ZD is declining, will be mirrored in inflationary pressure further down the line.
The introduction of a new currency is likely to be chaotic and the release of larger denomination bearer cheques is imminent.
Inflation is reliably estimated to be in excess of 35 000%, well ahead of the statistical office figure of 14 000% which is based on a manipulative weighting of the basket of basic goods and services.
