ZIMBABWE’S year-on-year inflation has risen to 66%, reflecting the country’s precarious economic environment.
From a deflationary environment in 2015, the inflation rate has been creeping up slowly over the past months, but the pace seems to have quickened to alarming levels in recent months as the macro-economic climate continues to deteriorate.
The Zimbabwe National Statistics Agency indicated that if it had not changed the weights used to calculate the consumer pricing index, the year-on-year inflation would have jumped to 166% from the previous month’s figure of 58%.
Whether we choose to go by the new scale or the old scale, it is beyond doubt that once again the economy is in a tailspin and the ghost of inflation, which is fast morphing into hyperinflation, is refusing to be tamed.
Foreign currency, just like confidence, is still in short supply.
Two of the country’s top foreign currency earners, tobacco and gold, are performing way below expectation as a result of the government’s convoluted payment systems.
The tobacco season started on a very poor note as sales continue to be dogged by disputes between merchants and farmers over payment terms.
On the other hand, gold deliveries to Fidelity Printers and Refineries in the first quarter have fallen some 10% on last year’s output.
Investor sentiment is weak. The droves in foreign capital that had been anticipated are nowhere to be seen. Instead, the country is witnessing massive capital flight as companies find the going difficult and fold.
The decision to float the real time gross settlement has not brought about much relief to industry which had sought a liberalised market for foreign currency.
On Tuesday, the RTGS dollar was trading at 3,19:1 on the interbank market and 5:1 on the black market.
The truth of the matter is that Zimbabwe’s problems cannot be wished away or addressed by superficial remedies because the challenges are deep-seated and far-reaching.
Finance minister Mthuli Ncube, elaborately laid out a reform agenda in the Transitional Stabilisation Programme, which seems to have lost steam somewhere along the way.
Government has not been expeditious with the reform agenda as would have been expected for a country targeting to reach middle income status by 2030 and, instead, things have remained the same, if not worse.
There is need for tangible improvements on transparency and efficiency by government departments, just as there is need to improve the regulatory environment and make it more conducive for business.