“Government says it will award its workers another
pay increase in June as prices of basic commodities continue to sky rocket,
eroding the purchasing power of disposable incomes,” reported Bulawayo 24.
“Civil servants in March agreed to a salary increase of between 25% and 29% as part of a $400 million cost of living adjustment after months of haggling.”
Here we go!
“Civil servants in March agreed to a salary increase of between 25% and 29% as part of a $400 million cost of living adjustment after months of haggling.”
Here we go!
As of today, Zimbabwe’s monthly inflation rate has
soared to 158% and prices are going to double every 21 days and so the civil
servants salary review is to be expected. Indeed, with inflation now growing
exponentially, the review is long.
What is worrying is that the economy is not growing;
if anything it is shrinking and will continue to do so given the drought, the
savage power cut by ZESA, etc. So the only way government is going to finance
the increased wage bill is by increasing supply of money regardless of the
value of the national wealth. This is the recipe for hyperinflation!
“In the 1997-2007 period, living standards
(as measured by real gross domestic product [GDP] per capita) fell by a
stunning 38%,” wrote Steve Hanke is Spotlight Zimbabwe.
“The episode, which peaked at an annual inflation rate of
89.7 sextillion percent — that is 89.7 followed by 20 zeros—in November of 2008,
had robbed people of their savings and financial institutions of their capital
through real (inflation-adjusted) interest rates that were actually negative.
“This form of theft occurred, in large part, due to laws and
regulations governing financial institutions (pensions funds, insurance
companies, building societies, and banks) that forced them to either purchase
government treasury bills that yielded only a small fraction of the current
inflation rate or make deposits at the Reserve Bank of Zimbabwe (RBZ) that paid
no interest.
“So, what was the cause of this economic meltdown? The blame
lay at the doorstep of the Zimbabwean government, whose policies forced the RBZ
to print money. From January 2005 to May 2007, the RBZ issued currency at a
rate that exceeded that of Germany’s central bank from January 1921 to May
1923, the ramp-up phase of the great German hyperinflation.”
The scrapping of the Z$ in 2008, the ending of
price controls and other measures end the hyperinflation. Still, the Zimbabwe
economy has never recovered from the hyperinflation of 1997 to 2008 nor has the
standard of living and life expectancy.
Zanu PF has reintroduced the Z$ or be it by giving
it a new name, first the Bond Note and now the RTGS$. The regime has now
started increasing the supply of the RTGS$ to fuel its wage and other
expenditure increases. We are well and truly back on the hyperinflation roller-coaster!
The authorities are only legally required to pay for infrastructure such as buildings and dams. They will not pay for moveable assets that were left behind, such as tractors and irrigation pipes.
ReplyDeleteThe government says that it will not compensate the farmers for the value of the land that they lost, which has always been one of the main bones of contention.
Zanu PF ruling elite were the main beneficiaries of the chaotic farm seizures. It is nonsense that the government is asking the taxpayers to foot the compensation bill when those who benefited from the seized asset are there particularly when they did not pay a penny for the seized wealth. They forced the farm owners to take none of the moveable assets and yet they now refuse to pay for them!
The Zanu PF regime is hoping that by paying the compensation it will be enough to get the sanctions lifted. The sanctions would have been lifted if the country had held free, fair and credible elections and hence the reasons the sanction must remain.
Zimbabwe’s debt-ridden government is in a dilemma after South Africa asked her northern neighbour to securitize mineral proceeds in exchange for a US$1.2 billion bailout package, it has been established.
ReplyDeleteZimbabwe must sort out its political and economic problems behind the country’s economic meltdown such as ending corruption; holding free, fair and credible elections; etc. As long as the country remains a pariah state ruled by corrupt and vote rigging thugs the country’s economy will never recover.
Zimbabwe has found it impossible to get any financial assistance from IMF, WB and other institutions because of the country’s “junk” credit rating. With nowhere else to turn the country has often turned to nations like China, Russia, etc. who have granted it loans at extortionist interest rate and repayments conditions. The country has been asked to sell its minerals at give up prices and thus indenting and mortgaging the nation to its eye balls. Now it seems SA is joining the queue of extortionists and exploiters.
Let this be a warning to all: the day Zanu PF falls all those who have propped the regime must take the hit because the incoming government will be under no obligation to honour extortionist loans! Why should we!!!!!
Finance Minister Mthuli Ncube has failed to attract the investors and the the lenders and thus revive the nation's economy. Ever since the day Zanu PF introduced the Bond Notes as the country's de facto currency, the regime has fought hard to resist the temptation to solve the country's economic problems by increasing the amount of Bond Notes. But as it has become increasingly clear that the regime has failed to revive the economy, the pressure to increase Bond Notes has become unbearable. With monthly inflation rate now at 158% it is now clear the hand-break is off and we going down a slippery path!
ReplyDeleteBefore the 2008 elections Mugabe awarded civil servant a record 700% pay increase but with inflation in the billions of billions of billions the increase was nothing. In March the civil servants got 25 to 29% one wonders what Mnangagwa will offer them this time. Anything short of a three digit increase will be an insult to the workers and yet a three digit increase will only fuel inflation so that by the end of the year inflation would have soared 100 times, at least!
The solution is for Zanu PF to step down. The regime rigged last year's elections, it is illegitimate, it has no mandate to govern and there is no other way out that is the only way out. The pressure on Zanu PF to step down would be considerable right now was it not for the opposition party who gave the process some credibility by participating and then accepting the results as legitimate.
Zimbabwe has been stuck in a chaotic state for the last 39 years and counting. The only way out of this vicious cycle is the country to implement the democratic reforms and end this curse of rigged elections and pariah state.
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