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New inflation warning for Zimbabwe

  • Story Highlights
  • IMF says Zimbabwe's inflation rate could pass 100,000 percent
  • Zimbabwe central bank says it will issue higher denominated bank notes
  • Hyperinflation and shortages are ravaging the southern African country
  • Government lopped three zeroes from the local currency a year ago
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MAPUTO, Mozambique (Reuters) -- The IMF said on Tuesday that Zimbabwe's year-on-year inflation rate could reach over 100,000 percent by the end of the year.

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Riot police clash with shoppers trying to enter a wholesale store in Harare.

"... If recent monthly trends continue, (IMF) staff projects that year-on-year inflation could well exceed 100,000 percent by year-end," Abdoulaye Bio Tchane, director of the IMF's Africa department, told Reuters in an interview.

Zimbabwe's central bank said it would issue higher denominated bank notes on Wednesday to help consumers cope with hyperinflation ravaging the southern African country.

President Robert Mugabe's government lopped off three zeroes from the local currency a year ago in its struggle against inflation -- now officially running above 4,500 percent although analysts believe the figure to be double that.

"Economic prospects are bleak, staff projects that GDP will continue to contract in 2007 and inflation will spiral higher," said Bio Tchane.

"Price controls that are being enforced are likely to exacerbate shortages and ultimately fuel further inflation". E-mail to a friend E-mail to a friend

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