Makoni acknowledges economic crisis

Meanwhile in London, Zimbabwean Finance Minister Simba Makoni said on Tuesday the country’s economy was in crisis and that poverty was spreading at an alarming rate, Reuters reported. “I would have to be foolish to deny what is evident to everybody in broad daylight, even in the darkness of night - this economy is in crisis,” Makoni said in a BBC television interview. Questioned about the impact on ordinary Zimbabweans in urban and rural areas, he said: “Severe. Poverty is entrenching here at a rate that is very alarming.”

A new report by the Economist Intelligence Unit (EIU) said the street value of the Zimbabwe dollar has collapsed by a third during the past week, adding to inflationary pressures and exacerbating shortages in the economy. But, the EIU said, the government appears “neither willing nor able to institute the reforms necessary to halt the slide” in the value of the Zimbabwe dollar.

The effective value of the Zimbabwe dollar has been sliding for the past two months, with the parallel rate falling from 130 Zimbabwean dollars to US $1, to 170 Zimbabwean dollars about two weeks ago. During the week of 15-20 July, the slide accelerated sharply, with the beleaguered currency falling by 33 percent to 255 Zimbabwean dollars to the US dollar.
The official rate remains 55 Zimbabwean dollars to the US dollar, masking a de facto 78 percent depreciation, the report said.

The government has been quick to blame white farmers, currency traders, and the private sector in general for growing foreign exchange shortages. But, the EIU suggested, the slide has been driven in the short term by tight exchange controls; worries over food shortages; new land seizures and panic in the market.