Gono revises inflation target 100% upwards

Gono revises inflation target 100% upwards

GONO

• Gono's 'sleepless nights' over inflation

• Gono fighting a losing battle

• Gono, the Zimbabwean Napoleon

• The small minds in charge of our economy

• Overcoming the 'Messiah Complex'

By Mduduzi Mathuthu

ZIMBABWE'S Reserve Bank chief Gideon Gono was expected to radically revise his inflationary targets for this year when he announces his monetary policy on Thursday.

Sources told New Zimbabwe.com Gono's targetted 35% percent inflation by the end of the year had been revised upwards to around 70%.

Gono was also expected to devalue the Zimbabwe dollar, bringing it to between $9000 to $10000 against the United States dollar, from the current official rate of 1:$6200.

The country's troubled export market can also look forward to increased rates for secured and unsecured lending rates, and a reduction to concessionary lending rates.

Sources told this website last night the hiking of interest rates was designed to end speculative activities, while the reduction in special lending rates was seen as a boost to the productive sector which is in urgent need of cheap funds to sustain industrial activity.

Gono recently told journalists he was having "sleepless nights" trying to turn around Zimbabwe's economy. Commentators and opponents say Gono's chances of success are held back by a lack of political backing for his policies.

From an all-time high of more than 622% in January 2004, the inflation rate dropped to 123.7% this March, but inflationary pressures are once again high and there are fears it will soar again. Currently, inflation stands at 129%.

"The governor notices that inflationary pressures are being refuelled by increased money supply and a wave of wage increases, two things he has to address," a source told New Zimbabwe.com.

Gono was also expected to attack black market traders, blamed for driving up exchange rates with the illegal street foreign currency industry.

A source close to the governor said: "The governor is clear that these people are throwing spanners into his economic turnaround programme. He sees the parallel market as the biggest challenge to his programme which has so far failed to go beyond reduced inflation."

However, our sources who have seen the governor's monetary policy document say there will be no revolutionary measures to address serious shortages of water, power, fuel, forex and other basic commodities.

"It will just be ringing solutions to our multi-layered problems, nothing spectacular," New Zimbabwe.com was told.

Gono has been under increased pressure, both political and work related, to reorganise the economy. He is known to be extremely unhappy with the lack of political backing for his policies from President Robert Mugabe, but is seen as too loyal to quit.
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