Zimbabwe's inflation shoots to 2 200%

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By Staff Reporter

ZIMBABWE'S annual inflation jumped to a record 2,200 percent in March, central bank Governor Gideon Gono said on Thursday as the country's economic and political crisis deepened.

He dismissed calls to devalue the Zimbabwean currency, saying it would remain at its official peg of 250 to the U.S. dollar -- almost 100 times less than the black market rate -- although he said the bank would buy foreign exchange at a new rate to help build a "drought stabilisation fund".

Zimbabwe, once the breadbasket of southern Africa, is crippled by foreign currency and fuel shortages, unemployment of over 80 percent and the highest rate of inflation in the world.

"Year-on-year inflation, which stood at 1,072.2 percent in October last year, rose to 1,281.1 in December and has risen to 2,200 percent by March," Gono said in a televised statement.

"Both food and non-food inflation contributed to the inflation spiral."

The rate of increase in February was 1,729.9 percent.

Gono made his interim monetary policy statement two months ahead of schedule in an attempt to tackle the crisis, widely blamed on President Robert Mugabe's policies.

The government has responded to a series of strikes and political protests since the beginning of the year with a violent crackdown on political opponents.

The central bank governor said the overnight secured interest rate would rise to 600 percent from 500 percent previously. The unsecured rate would rise to 700 percent from 600 percent.

On the exchange rate, he said: "There is not going to be an exchange rate movement from 250 to the U.S. dollar. There is no devaluation."

However, he indirectly revalued the Zimbabwe dollar to an effective rate of Z$15,000 to the U.S. currency by offering a new rate for central bank purchases of foreign currency for the new drought stabilisation fund.

The country's exporters, mainly miners and tobacco farmers, have protested that the skewed exchange rate has devastated their businesses.

The March inflation data had been due for release earlier this month but Zimbabwe's state statistics agency delayed publication, saying it was still working on the figures. - Reuters

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