New low for Zimbabwean economy

20-04-2009

New low for Zimbabwean economy
Zimbabwe's economy contracted by its biggest-ever margin last year as the economic meltdown, seen in world record-breaking inflation of 231 million per cent officially, continued unabated, a report by the International Monetary Fund said.

The IMF report says Zimbabwe's GDP went down by 14 per cent in 2008, adding to a cumulative decline of over 40 per cent between 2000 and 2007.

The IMF report put pressure on the coalition government to sack the country's central bank governor, Gideon Gono, who it blamed for pursuing quasi-fiscal activities resulting in the 14 per cent slump of the country's GDP last year.

President Robert Mugabe reappointed Mr Gono for another five-year term in March, sparking protests from the opposition.

"Hyperinflation, driven by the Reserve Bank of Zimbabwe's quasi-fiscal activities, and a further significant deterioration in the business climate, contributed to an estimated 14 percent fall in real GDP in 2008, on top of the 40 percent cumulative decline during 2000-07. Poverty and unemployment have risen sharply," the IMF said.

The release of the IMF report comes ahead of a crisis meeting between the country's political leaders: President Mugabe, his deputies; Joice Mujuru and Joseph Msika, prime minister Morgan Tsvangirai and his two deputies; Arthur Mutambara and Thokozani Khuphe, over the issue of Mr Gono.

International finance institutions and western countries have put pressure on the young coalition government to remove Mr Gono before any direct aid starts flowing in, but Mugabe has dug in his heels and said he will not go.

Mugabe says Mr Gono saved Zimbabwe from total collapse and the ensuing chaos by bursting sanctions through excessive money printing and quasi fiscal activities when the government could not access lines of credit from international finance institutions.

Britain's Africa minister Lord Malloch-Brown has also called for the dismissal of Mr Gono before the country could be eligible for budgetary support. Lord Malloch-Brown said he did not trust the people who signed the cheques at the central bank.

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