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Zimbabwe's Economic Crisis Deepens

Robert Mugabe
Zimbabwe's spiraling economic decline following the March 31 general election seems to have caught everyone by surprise. Even economists were caught off guard by the deepening crisis.

Petrol is largely unavailable across Zimbabwe, which needs to import about $55 million of fuel a month.

Every day electricity is turned off in different areas of the country, sometimes for more than 12 hours at a time.

Rare stocks of the staple food, maize meal, are sold from delivery trucks to lines of people outside supermarkets. And, many every day items are in short supply. Electricians say there is no electric cable available and the only manufacturer has no foreign currency to import raw materials to make the cable.

Inflation, according to private sector economists is so unstable that an accurate assessment is impossible as prices are changing on a daily basis. They estimate that inflation may be heading towards 400 percent. The central bank pegged inflation below 130 percent just before the general election.

Veteran economist Tony Hawkins said everyone had been surprised at the rate of the economic decline after the elections. He said the government appears to have been taken aback and has not yet announced a plan to pull the country out of the economic crisis other than implementing price controls.

He said central bank governor Gideon Gono was expected to devalue the the Zimbabwe dollar and cut government spending when he makes a monetary policy statement expected in the next week or so.

Professor Hawkins said that it was clear that the government hoped that after running largely peaceful elections it would be rescued by international institutions, such as the International Monetary Fund and the World Bank, which he said is unlikely to happen.

The value of the Zimbabwe dollar on auctions at the the country's Reserve Bank is about 6,000 to $1 U.S. On the black market, street traders say they would pay upwards of 20,000 Zimbabwe dollars for $1 U.S. They also appear no longer afraid to trade openly on the streets, as they were a few months ago.

Zimbabwe's economic woes have been worsening during the past five years. The present trough, economists say, is the worst in living memory.