Zimbabwe inflation to 10 percent by end of year?

There is a lot that was audaciously optimistic about Zimbabwean President Robert Mugabe’s plea today for $5 billion to restart the country’s troubled economy. He seemed confident that donors would trust his government to dole out aid. He asked for assistance in the area of “governance” (while opposition activists were being simultaneously disappeared). Wackiest of ...

By , International Crisis Group’s senior analyst for Colombia.
587621_090319_zim2.jpg
587621_090319_zim2.jpg
New Zimbabwean dollar bills are unveiled by the Zimbabwe central bank in Zimbabwe on February 2, 2009. The bank today knocked 12 zeros off the local currency -- reducing one trillion dollars to one dollar -- and introduced seven new notes as it battles to revive its battered economy. "Yesterday's trillionaires, I am sorry, will not be able to buy their favourite drink today," Gono said as he announced the latest bid to keep pace with mind-boggling hyperinflation. AFP PHOTO / Desmond Kwande (Photo credit should read DESMOND KWANDE/AFP/Getty Images)

There is a lot that was audaciously optimistic about Zimbabwean President Robert Mugabe's plea today for $5 billion to restart the country's troubled economy. He seemed confident that donors would trust his government to dole out aid. He asked for assistance in the area of "governance" (while opposition activists were being simultaneously disappeared). Wackiest of all was a claim than Zimbabwe's can cut its 230 million percent inflation rate to just 10 (no million) percent in just a few months.

If only it were all so easy. Apparently not yielding to Mugabe's assesment of sanctions on his regime as "inhumane, cruel, and unwarranted," at least one donor -- the United States -- has already rejected the calls for aid. "We have not yet seen sufficient evidence from the government of Zimbabwe that they are firmly and irrevocably on a path to inclusive and effective governance as well as respect for human rights and the rule of law," U.S. State Department spokesman Robert Wood said today.

There is a lot that was audaciously optimistic about Zimbabwean President Robert Mugabe’s plea today for $5 billion to restart the country’s troubled economy. He seemed confident that donors would trust his government to dole out aid. He asked for assistance in the area of “governance” (while opposition activists were being simultaneously disappeared). Wackiest of all was a claim than Zimbabwe’s can cut its 230 million percent inflation rate to just 10 (no million) percent in just a few months.

If only it were all so easy. Apparently not yielding to Mugabe’s assesment of sanctions on his regime as “inhumane, cruel, and unwarranted,” at least one donor — the United States — has already rejected the calls for aid. “We have not yet seen sufficient evidence from the government of Zimbabwe that they are firmly and irrevocably on a path to inclusive and effective governance as well as respect for human rights and the rule of law,” U.S. State Department spokesman Robert Wood said today.

As to fixing the economy — the country needs a miracle as much as it does $5 billion. Even the government is running on fumes — cigarette fumes, to be specific. As Finance Minister Tendai Biti told CNN, “indirect taxes made up of customs and excise duty have contributed 88 percent of government revenue, which means that the government has been literally sustained by beer and cigarettes.” In such a state, and amid a global financial crisis, Zimbabwe is unlikely to find much support from its neighbor for adopting the South African Rand. No wonder Mugabe conceded the finance ministry to the opposition in this coalition government. 

All this creates a devil of a conundrum. To be certain, Zimbabwe needs help and lots of it. The country and its people are in a desperate state. But perhaps first, Zimbabwean policymakers need a reality check.

DESMOND KWANDE/AFP/Getty Images

Elizabeth Dickinson is International Crisis Group’s senior analyst for Colombia.

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