HARARE – Zimbabwe’s annual inflation dropped by 46.48 percentage points to 194 per cent in April 2021, ENN reports. This development has been confirmed by the Zimbabwe National Statistics Agency (ZIMSTAT).
In March this year, the country’s inflation stood at 240.33 per cent. From a trend analysis, this points to a reduction in the rate at which prices of goods and services are going up in Zimbabwe.
“This means that prices, as measured by the all-items CPI (Customer Price Index), increased by an average of 194.07 per cent between April 2020 and April 2021,” ZIMSTAT said.
The ministry of finance and Economic Development is projecting that annual inflation, which stood at 875 .55 per cent in May last year, will be below 100 per cent by mid-year, on the back of enhanced productivity, fiscal discipline and stringent monetary policy measures.
Two key policy milestones are credited for the deceleration of inflation in Zimbabwe. In April 2020, foreign currencies became legal tender again in Zimbabwe after the gazette of Statutory Instrument 85 of 2020 by the government of Zimbabwe. Two months later, in June, the Reserve Bank of Zimbabwe introduced a foreign currency auction system to stabilise the crisis-hit currency by ensuring that large corporates do not turn to black-market trading for their foreign currency needs. Effectively, the Zimbabwe economy redollarised as confirmed by the over 50% of Zimbabwe’s broad money- being in foreign currency.
To achieve its 2021 inflation targets, Zimbabwe must enforce fiscal and monetary discipline, without prejudice against its citizens. This is the only way the country can collectively achieve its sustainable development goals of poverty alleviation, hunger eradication and economic prosperity. As conflicts in northern Mozambique continue, talks of foreign intervention are gathering momentum. For Zimbabwe, the Mozambique case is a national security threat due to its geolocational proximity. However, Zimbabwe’s interventions must be guided by key economic lessons from the September 1998 decision by former president Robert Mugabe to send 11,000 troops to the Democratic Republic of Congo under the SADC protocol to back Laurent Kabila, who was under attack by rebels. To put this into perspective, a 1998 letter written by Mugabe’s finance ministry to the IMF seeking funds puts the funds to finance the war at USD1.3 million per month in 1998. This went up to USD3 million per month in 1999, after the deployment of additional troops to the Democratic Republic of Congo, which constituted 0.6 per cent of GDP (IMF, 1999).