Zimbabwe’s annual inflation jumped to a record 2 200% 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 will remain at its official peg of Z$250 to the United States dollar — almost 100 times less than the black-market rate — although he said the bank will 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 more than 80% and the highest rate of inflation in the world.
”Year-on-year inflation, which stood at 1 072,2% in October last year, rose to 1 281,1% in December and has risen to 2 200% 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%.
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 will rise to 600% from 500% previously. The unsecured rate will rise to 700% from 600%.
On the exchange rate, he said: ”There is not going to be an exchange-rate movement from Z$250 to the US dollar. There is no devaluation.”
However, he indirectly revalued the Zimbabwe dollar to an effective rate of Z$15 000 to the US 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