Zimbabwe's government has begun rolling the printing presses to produce about 60 trillion Zimbabwean dollars. The additional currency is required to finance the recent increase in salaries for soldiers and policemen. The money was not budgeted for the current fiscal year, and the government did not say where it would come from.
Economists fear printing more money will only fuel more inflation and kill the already dim prospects of any economic recovery. Voice of America reporter Cole Mallard spoke with economist John Robertson, in Harare who says he agrees.
Robertson says it will create more demand but increase the scarcity of goods available to purchase. He says the government is printing more money because it has no other options, adding that the country has had a shrinking economy now for the last eight years. Robertson says Zimbabwe can’t borrow more money because payments on its present debt leave little money for future borrowing.
He says the government’s land reform program is mainly responsible for the present economic condition; it has caused low employment, the need to import food, fewer jobs in industry related to agriculture, and no exports.
He says the decreasing tax base from private industry income is not enough to handle the government’s “very high burden of commitments to its own employees, the army, the police, the civil servants, the teaching profession, the health profession, all of them need to be paid.”
The economist says the bottom line is higher inflation. He says the inflation rate – at 1000%, the highest in the world – could possibly double, which could destabilize the government. Robertson says that kind of inflation usually “becomes destructive of government policies, and quite often has led to a change in government eventually.”