Gono's economic plan crumbles as inflation shoots up

Gono's economic plan crumbles as inflation shoots up

Gideon Gono

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By Staff Reporter

GIDEON Gono's fiscal policy blew up in flames last night as inflation rocketed by 15 percent.

Just over a month after the Reserve Bank governor was forced to revise his inflation target 100 percent upwards in a key policy statement, figures released Tuesday showed inflation at 144,4 percent, up from 129,1 percent in April.

At the start of the year, Gono had indicated he projected the inflation which peaked at over 600 percent would fall to 20 percent by year end.

He has since discarded that projection, revising it 100 percent upwards. In a recent policy statement, Gono told restive investors that his best effort would be to get inflation below 50%.

It was more likely it would close at around 80% at the end of the year, he said. But following Tuesday's marked rise, it appeared a tall order for Gono to bring inflation to two-digit figures inside six months.

The Central Statistical Office which announced the figures said the rise in inflation followed an increase in prices of essential commodities and rentals.

"The increase in prices from April to May this year was accounted for by the increase in average price of beverages, rent, rates, meat, fruits and vegetables. The year-on-year inflation was also largely accounted for by the increase in prices of beverages, meat, fruits and vegetables as well as communication," said the CSO's acting director Moffat Nyoni.

Economic commentators say Gono's attempts to arrest the high inflation will fail due to lack of political backing for his policies from President Robert Mugabe.

Analysts say some of Gono's well thought out economic recovery projects would be viable with President Mugabe out of the way, pointing to an international distrust of his administration.

Gono's idea of harnessing foreign currency from exiles, known as Homelink, has been a disastrous failure due to a competitive parallel market which has been dictating exchange rates.
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