We’ll write that figure again to help it sink in.
Zimbabwe’s annual inflation rate is now running at two trillion percent.
Steve H. Hanke, a leading specialist in what economists refer to as "exchange-rate regimes," notes in research findings published by the Cato Institute, a Washington-based think tank, that Zimbabwe has become the first country in the still-young 21st century to "hyperinflate." Explanation: "In February 2007, Zimbabwe’s inflation rate topped 50% per month, the minimum rate required to qualify as a hyperinflation (50% per month is equal to a 12,875% per year). Since then, inflation has soared." Zimbabwe’s central bank has not been very forthcoming with its own official data concerning inflation. Thus, it has become considerably difficult for foreign economists who are trying to monitor the country’s crisis "to quantify the depth and breadth of the still-growing crisis in Zimbabwe." (Cato Institute, via AllAfrica.com)
To address this problem, Hanke, a senior fellow at the Cato Institute, "has developed the Hanke Hyperinflation Index for Zimbabwe (HHIZ). This new metric is derived from market-based price data and is presented in [an] accompanying table for the January 2007-to-present period." (Hanke’s findings and that data chart are available here, on the Cato Institute’s website.) According to Hanke’s calculations, as of late last week, Zimbabwe’s annual inflation rate was two trillion percent."
Mugabe and supporters of his ZANU-PF party had done their best to intimidate backers of the opposing Movement for Democratic Change party in the period leading up to the first round of voting in Zimbabwe’s presidential election this year; that round took place at the end of March. The intimidation continued during the run-up to the run-off vote in June. Last month came the news that Mugabe would be willing to cut a power-sharing deal with his rival, Morgan Tsvangirai, the head of the MDC.
However, as of yesterday, ongoing talks between the ZANU-PF and the MDC appeared to be stalling, with the two sides unable to agree on how cabinet posts in a prospective coalition government would be divided up. Yesterday, one of Tsvangirai’s senior aides told Reuters: "There’s no progress, there’s a clear deadlock. We met again today but couldn’t move the process forward." Reuters notes that, under an "outline agreement" the two sides have been discussing, "Mugabe would retain the presidency and chair the cabinet, while Tsvangirai would head a council of ministers supervising the cabinet. Without a breakthrough, Zimbabwe’s economy could worsen still further."
In response to the out-of-control inflation rate, Zimbabwe’s current, not-quite-a-government government has allowed some shops and fuel stations to receive payments for the merchandise they sell in so-called hard, foreign currency. "The officially sanctioned launch of hard-currency shops follows a well-established trend of dollarization in the battered Zimbabwean economy. Many goods are offered in the parallel or black market only for hard currencies, and many landlords demand rents in [foreign exchange]. Meanwhile, banks were running out of local currency despite the introduction last week by [Zimbabwe’s central bank] of notes in higher denominations" of $10,000 and $20,000 Zimbabwean dollars. (Voice of America)
Meanwhile, Zimbabwe’s school system is in a crisis, too. Britain’s Times reports: "The class of 2008 will not receive an education. Since the school year began in January, Zimbabwe’s 4.5 million pupils have had a total of 23 days uninterrupted in the classroom, teaching unions say – a sorry state for a country that once had the highest standard of education in Africa….As with most of the country’s infrastructure, that system is now in the process of total collapse….To avoid the humiliation of total failure in 2008, the government has canceled the academic year….In January, teachers went on a prolonged strike over their salaries. In April, [Mugabe’s ZANU-PF party] accused them of [having] support[ed] the Movement for Democratic Change…during the March [run-off] elections and blamed them for the president’s first-round defeat. Six teachers were murdered and thousands assaulted by ZANU-PF militia in the violence that marred the second-round presidential election on June 27. Schools were looted and turned into torture centers. Teachers disappeared. Many are still unable to return for fear of being disciplined….Teachers had their salaries doubled last week to the equivalent of [U.S.$9.93] a month – barely enough for bus fares and bread for four days."