With inflation in Zimbabwe now running just over 1,200%, the International Monetary Fund has come out with the somewhat startling forecast that - barring major changes in Harare's economic policies - inflation could top 4,000% in the course of 2007.

The report said inflation is falling in Sub-Saharan Africa as a whole, with the exception of Zimbabwe. Unless policies change, said the IMF, inflation in Zimbabwe could surge to an average annual inflation rate of 4,279% for 2007, implying even higher peaks.

A senior IMF official for Africa said on the weekend called the economic outlook "grim" and spoke of a "tragic situation" following eight years of economic decline.

However, Bulawayo-based economist Eric Bloch told reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe that the IMF forecast seems an exaggeration.

The IMF has strongly urged Harare to bring spending under control. But a senior Finance Ministry official said Tuesday that state printing presses have been running nonstop to meet cash needs of by government agencies and state-run enterprises.

Speaking on condition of anonymity, the offficial said parastatals like the Zimbabwe Electricity Supply Company and the National Oil Company, as well as ministries, have warned Finance Minister Herbert Murerwa and Reserve Bank Bank Governor Gideon Gono that they need bailouts for a total of Z$100 billion, or cease operating.

Gono has publicly acknowledged such demands. He told a lecture audience at Solusi University, near Bulawayo, that Vice President Joseph Msika had told him to provide the Zimbabwe National Water Authority and Harare City Council with Z$21 million to buy water purification chemicals. Gono said he he would “print money as a quasi-fiscal operation” to help ZINWA and Harare deal with their water emergencies.

For a view on this economic strategem, reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe turned to chief economist Prosper Chitambara of the Labor and Economic Development Institute, an arm of the Zimbabwe Congress of Trade Unions.

More reports from VOA's Studio 7 for Zimbabwe...