Thursday, June 15, 2006

In the News

I read the following article in Zimnews (Zimbabwe's largest online newspaper) over lunch today. It referenced the fact that Zimbabwe released it's largest denomination of currency last week, the Z$100,000 bearers note, so I have included an article about that as well. I cannot even begin to imagine what must be going on in a country where your largest denomination is worth $0.98 US and can't even buy a loaf of bread.

Praying that they will find peace and blessings,
JZ.

Zimbabwe Ranked The Poorest Of The Word's Poor

Wednesday, June 14 2006 @ 11:05 AM BSTContributed
by: Zimdaily


The government of Zimbabwe, a country in the throes of a major economic crisis, has rejected a recommendation by a U.N. committee that the cash-starved African nation be "downgraded" to the status of a least developed country (LDCs), the poorest of the world's poor. The recommendation by the Committee for Development Policy (CDP), comprising 22 U.N.-appointed experts, can be implemented only if the decision is acceptable to the country concerned.

In a letter to the CDP, the government of Zimbabwe said it "does not give its consent to be downgraded to LDC status". An African diplomat told IPS that some countries view LDC status -- rightly or wrongly -- as "both a political and economic stigma". "I am not surprised that Zimbabwe has rejected the recommendation," he added. Additionally, an LDC status is considered by some as an admission of failure of a country's economic policies. And in the case of Zimbabwe, President Robert Mugabe has refused to accept failure.

Mugabe, who still commands respect in the African continent, has blamed his country's economic crisis on sanctions imposed by the European Union (EU) -- and prompted by Britain -- in retaliation for his land reform policies which transferred white-owned farms to landless Zimbabweans.

The Zimbabwean president has defended his policy as necessary "to redress the gross imbalances" of British colonialism. The EU has also placed a travel ban barring him from visiting any of the 25 EU member
countries. Currently, there are 50 LDCs, of which 34 are from Africa. Since the General Assembly adopted a resolution creating the new category of LDCs in the 1970s, the number of countries has grown from about 22 to 50. So far, the only country that has graduated from an LDC to a "developing country" is Botswana.

Besides Zimbabwe, the CDP has recommended that Papua New Guinea also be downgraded to the status of LDC. A response from the government of the Pacific Island nation is pending. As a result of significant economic improvements, however, four countries are now considered "eligible for graduation" from LDC to developing country status: Equatorial Guinea, Kiribati, Tuvalu and Vanuatu.

In a report released last week, the Brussels-based International Crisis Group (ICG) said that in April 2006, inflation officially topped 1,000 percent, helped by the decision to print 230 million dollars worth of Zimbabwean currency to pay international debts and sustain operations.
"Unemployment is over 85 percent, poverty over 90 percent, and foreign reserves are almost depleted. Over four million persons are in desperate
need of food. HIV/AIDS and malnutrition kill thousands every month," the report said.

Agriculture, the major source of foreign currency earnings, has been particularly hard-hit. "There are severe shortages of basic consumer items, and the prices of fuel and food are beyond the reach of many," the
report added. Ralph Black of the Association of Zimbabweans Based Abroad says the CDP recommendation to the U.N.'s Economic and Social
Council to declare Zimbabwe a LDC signals a renewed effort by the
international body to engage in reaching a resolution to the multilayered crisis that has crippled what was once "Africa's breadbasket".

"Finally the Zimbabwean crisis is firmly on the U.N. Agenda," Black told
IPS. Most noticeable signs of this fact are the assessments of the U.N.
Special Envoy on the affects of Operation Murambatstvina -- which involved the destruction of shanties -- and U.N. Secretary-General Kofi Annan's reported diplomatic involvement in seeking a political resolution to the current impasse. Clearly, he said, the vulnerability of Zimbabwe relevant to its designation as a LDC is driven on three main fronts.

First, the nation's domestic national income has decreased rapidly over the past three years, mainly due to quadruple-digit inflation. Second, the country's human assets have been adversely affected by the deterioration of educational standards and decreased enrollment and increased dropout rates, affecting literacy rates over the long term. Further, Zimbabwe has experienced declining nutrition, adversely affecting mortality rates, especially amongst the most vulnerable segments of the population -- children and those affected by HIV/AIDS. Due to economic constraints, the health delivery sector has collapsed
further, exacerbating the national hygiene and wellness and adversely affecting mortality, he noted.

Third, Zimbabwe's economic vulnerability has reached alarming proportions due to the disruption of the agricultural sector's output/production.


Inflation-hit Zimbabwe unveils Z$100 000 banknote

author/source:Mail & Guardian (SA)
published:Wed 31-May-2006

Harare - Zimbabwe's central bank will issue a new Z$100 000 banknote
after inflation topped 1 000% last month, one of the world's highest rates, a state daily reported on Wednesday. The new banknote, worth US98c, will go into circulation on Thursday and will hold tender until December, The Herald newspaper said. Zimbabwe started introducing bearer cheques with a temporary validity three years ago to ease critical cash shortages. The latest note, with a picture of the world-famous Victoria Falls, comes four months after Zimbabwe's reserve bank unveiled a Z$50 000 bearer cheque. "It is not the first and last time to see us introducing bearer cheques and we will not hesitate to introduce higher denominations," The Herald quoted Reserve Bank Governor Gideon Gono as saying. "For the past few months, we have been assessing to see whether the current denominations were still serving the intended purpose."

Zimbabwe is in the throes of an economic crisis with galloping inflation,
which peaked at 1 042,9% last month, soaring poverty levels, a 70%-plus
unemployment rate and acute shortages of fuel and basic goods. Central bank governor Gono had forecast that annual inflation would peak at 800% in March and recede to below 500% in June before reaching double-digits in 2007. But independent economists are warning that Zimbabwean inflation is fast approaching the 2 000% mark. "In economic terms, the velocity of the circulation of money will be increasing rapidly," John Legat, of the Harare-based Imara Asset Management, said in an alert last week. "Wages are likely to be rising as fast as inflation. Prices are being driven by ever-higher input costs at point of manufacture. This suggests that current inflation is nearer 1 500% to 2 000%." At the country's independence from British colonial rule in 1980, the Zimbabwean dollar was roughly at par with the pound sterling. Zimbabweans then used cents, one dollar coins and bank notes in four denominations. But due to inflation, the Zimbabwe government introduced five new denominations from 2001, while coins were phased out as the value of the Zimbabwe dollar continued to depreciate
against major currencies.

posted by JZ @ 12:45 PM Comments: 0