Zim still sees lower 2006 inflation

HARARE – Zimbabwe’s central bank governor Gideon Gono said on Wednesday the bank was still confident of bringing inflation down to double digits by the end of 2006, but would not say whether this year’s target was achievable.

Rampaging inflation is one of the most visible signs of an economy in its sixth year of recession marked by chronic shortages of foreign currency, fuel and food widely blamed on President Robert Mugabe’s government. Official data showed inflation jumped to 411 per cent in October on the back of soaring demand for bicycles in a country crippled by fuel shortages, all but burying the Reserve Bank’s hope of taming it to 300 by year-end, analysts said.”We are not surprised by the year-on-year inflation (but) we have seen …a decline in the month-on-month inflation, that is a significant indicator of the direction,” Gono told a media briefing.”We are still hopeful that in broad terms by the end of 2006 we will have brought our inflation down to lower double digits with single-digit levels being attained in the first half of 2007,” he added, but declined to comment on the 2005 target.Gono said the southern African country, where simple day-to-day transactions like grocery shopping now involve six-digit figures, would introduce a new currency next year, but would not give details.Prices of basic commodities have more than doubled in the past month alone, an alarming trend analysts have attributed to the local dollar’s slump after it was partly floated tumbled some 66 per cent against the US dollar.”Let’s just say that there is going to be an introduction of a new currency,” Gono said on Wednesday.”Whether it is going to take the form of (dropping some) zeroes, whether it is going to take the form of a new texture or new notes, denominations, I think leave the governor the privilege of actually coming to the market,” he added.He said a foreign currency crunch which has plagued Zimbabwe since 1999 had eased since the partial float, but gave no figures of inflows into the formal system, which has in recent years been starved of currency by a thriving black market where higher rates are on offer.Critics say a once thriving economy has been brought to its knees by skewed government policies, including the seizure of land from white commercial farmers to redistribute among blacks, a programme they say has destroyed the key agriculture sector.Gono rounded again on reported fresh farm invasions in a repeat of 2000 when hundreds of Mugabe’s supporters moved onto white-owned properties in support of the government’s land reforms – saying these undermined food security.Mugabe, in power since independence from Britain in 1980, argues that local and foreign opponents of his land reforms have sabotaged the economy in retaliation.-Nampa-ReutersOfficial data showed inflation jumped to 411 per cent in October on the back of soaring demand for bicycles in a country crippled by fuel shortages, all but burying the Reserve Bank’s hope of taming it to 300 by year-end, analysts said.”We are not surprised by the year-on-year inflation (but) we have seen …a decline in the month-on-month inflation, that is a significant indicator of the direction,” Gono told a media briefing.”We are still hopeful that in broad terms by the end of 2006 we will have brought our inflation down to lower double digits with single-digit levels being attained in the first half of 2007,” he added, but declined to comment on the 2005 target.Gono said the southern African country, where simple day-to-day transactions like grocery shopping now involve six-digit figures, would introduce a new currency next year, but would not give details.Prices of basic commodities have more than doubled in the past month alone, an alarming trend analysts have attributed to the local dollar’s slump after it was partly floated tumbled some 66 per cent against the US dollar.”Let’s just say that there is going to be an introduction of a new currency,” Gono said on Wednesday.”Whether it is going to take the form of (dropping some) zeroes, whether it is going to take the form of a new texture or new notes, denominations, I think leave the governor the privilege of actually coming to the market,” he added.He said a foreign currency crunch which has plagued Zimbabwe since 1999 had eased since the partial float, but gave no figures of inflows into the formal system, which has in recent years been starved of currency by a thriving black market where higher rates are on offer.Critics say a once thriving economy has been brought to its knees by skewed government policies, including the seizure of land from white commercial farmers to redistribute among blacks, a programme they say has destroyed the key agriculture sector.Gono rounded again on reported fresh farm invasions in a repeat of 2000 when hundreds of Mugabe’s supporters moved onto white-owned properties in support of the government’s land reforms – saying these undermined food security.Mugabe, in power since independence from Britain in 1980, argues that local and foreign opponents of his land reforms have sabotaged the economy in retaliation.-Nampa-Reuters