[You may remember months ago, I was questioning whether Zimbabwe’s inflation was really coming down as per the Govt predictions – or shall we say, as per the Govt propaganda.

This is beautiful – really. It brings us back to my thoughts about the so-called “Loan” by S.Africa to Zimbabwe. Let’s not call it that – because that is a propaganda lie. It is more like an ANC Donation to Robert Mugabe.

I said, in my article: “Mugabe: The Ulcer that will destroy the ANC” that I think the Zim economy is so shot to hell, that S.Africa will be forced to keep on bailing out Mugabe, ad infinitum. I think this racing inflation is merely an indicator of the extent of the total destruction of the economy. So I think it is great that the ANC will be pumping money into Mugabe’s bottomless pit/hell hole… because it will hurt the ANC, and S.Africa tremendously.

The good news is – this inflation figure shows how much Mugabe’s grip is also weakening – you know – laying the foundation for REVOLUTION there.

And it brings tears to my eyes to see how completely stupid the ANC is to commit themselves to propping this dead man up. I don’t think the Right Wing in S.Africa could ever hurt the ANC even 1/10th as much as Robert Mugabe is about to do! It’s just going to be too utterly beautiful to watch. Who said politics couldn’t have moments of beauty? Its enought to make a man quite emotional!!! Jan]

DESPITE RBZ governor Gideon Gono’s insistence that inflation will end the year at 80%, analysts expect it to gallop to 400% by December as government continues its wasteful spending.

Gono yesterday put on a brave face, maintaining that his targets on inflation were still achievable.

Presenting his monetary review statement, Gono said inflation would continue rising until September when it would start falling.

“The unfavourable trend is, however, expected to reverse during the last quarter of the year, with annual inflation still targeted to recede to around 80% by December 2005,” said Gono.

He did not give the reasons for his optimism or indicate the key factors that would suppress inflation after September. Analysts however say judging by the situation on the ground, Gono’s target of a two-digit inflation by December had virtually collapsed because of government’s profligacy.

Recent fuel hikes and a drastic increase in prices of basic commodities would stoke up inflationary pressures, analysts have warned.

The analysts said inflation was likely to hurtle to more than 400% by December. Prices of basic goods have increased by over 80% in the past month. The analysts say there will be further hikes as manufacturers factor in fuel charges into their costs.

They say inflation, reported to be around 164,4% last month, could continue rising to December and probably spill into next January unless government tames its spending.

Government has been funding its unbudgeted expenditure and domestic debt through printing more money — a practice that is highly inflationary and erodes national wealth. Domestic debt last week hurtled to about $12 trillion, almost half of this year’s national budget.

Fears of a further inflationary surge have also been triggered by information that the Finance ministry is working on a $12 trillion supplementary budget due early next month. Economist Daniel Ndlela said inflationary pressures could throw Gono’s plans for a double-digit inflation figure into disarray.

“Inflation will certainly rise sharply in the coming few months. Unlike in the past, this time the rise is likely to be sharp,” Ndlela said.

He said although fuel prices were a factor, government’s unbudgeted expenditure was the major inflation trigger.

“The printing of money is the biggest contributor to inflation. The expenditure is being supported by money printing.”

Gono said government credit has accounted for 343% total money growth through grain imports and funds for the March parliamentary election.

“They have had to run the printers again and again to finance their expenditure and debt and that is highly inflationary,” Ndlela said.

Economist John Robertson said the central bank had also fuelled inflation through cheap funds doled out under the Productive Sector Facility (PSF). Since his appointment 21 months ago, Gono has splashed a record $21,4 trillion on different sectors, ostensibly to revive the economy.

“Although fuel and prices of commodities will contribute to the inflation, the government is currently the biggest culprit,” Robertson said. “Subsidised funding by the RBZ has also been inflationary. The net effect is more company closures as they struggle with high wages. It means more suffering for the people,” he said.

Since last July Gono has also given out a massive $21 trillion, most of which has not been repaid or was misused by beneficiaries. The central bank was recently forced to release $3 trillion to finance the rebuilding exercise following government’s controversial Operation Murambatsvina which left thousands homeless.

Unbudgeted expenditure has pumped up inflation and the effects will continue to be felt unless it is supported by production. An IMF mission which visited Zimbabwe last month noted that the subsidised funding was inflationary.

Source: AllAfrica.Com
URL: http://allafrica.com/stories/200507220017.htm…/p>