Mugabe Devalues Currency

Robert Mugabe has just devalued the Zimbabwean dollar from it's ridiculous fixed value of Z$250 to US$1 - which everyone in the world knew was a farce since the unofficial exchange rate is actually Z$260,000 to US$1. Is it a dose of reality at last?

Nope - it's a way to allow government cronies to get their hands on American dollars.

Zimbabwe injected a partial element of reality into its chaotic economy yesterday, abandoning its fixed official exchange rate of 250 Zimbabwean dollars to the US currency.

It fixed the new rate at Z$30,000 to the US dollar, an official devaluation of more than 99 per cent, but still well above its true value — on the black market US$1 fetches around Z$260,000.

The official rate is used for government transactions, but is also a hugely lucrative opportunity for senior officials in Robert Mugabe's regime, who are entitled to use it exchange the virtually worthless Zimbabwean currency for US dollars.

Mr Mugabe's mismanagement has given Zimbabwe has the highest inflation in the world, officially 7,634 per cent, and its economy has been shrinking for seven years.

Announcing the move, the finance minister Samuel Mumbengegwi admitted the country was in crisis, but blamed supposed sanctions by the West for the situation.

"In this environment characterised by absence of balance of payments support, withdrawals of lines of credit and disinvestment by foreign firms, foreign currency shortages for importation of raw materials, fuel, equipment and electricity continue to affect operations of the key economic sectors," he told parliament.

Hyperinflation has left the government with no remaining funds for the year, he said, and he introduced a supplementary budget to enable it to pay the salaries of government employees.

Zimbabweans who benefitted from the seizure of white-owned land would in future have to pay rent, he added, without giving details.

Catch that last bit? The government stole the land that used to make Zimbabwe the breadbasket of Africa, ruined all that and dropped agricultural production into the toilet, gave the now-unproductive land to cronies and (some) of the people - but now they are going to essentially take it back. They won't make it until Christmas. That country is in real trouble.

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  By Mwalimu Daudi, Thursday, 6 September , 2007 @ 9:18 pm

  Looks like Mugabe is looking to displace the late President of Zaire Mobutu Sese Seko as Africa’s most prolific kleptocrat. On a continent chock full of thieving leaders, that is saying something.

  Note the last part about those who got the lands the Zimbabwe government seized having to pay “rent”. Betcha Z$260,000 that was not what Mugabe originally promised to those who supported him! It never occurs to recipients of government largess that there is always a price to be paid (advocates of government-sponsored “free” health care in this country especially please pay close attention).

  Gaius, thank you for posting regularly about this issue. I lived in Africa for a number of years (my wife is African), and I am heartsick over what the vast majority of African leaders do to their people. Most of the Western “progressives” either ignore what is going on or even approve of it.

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  By Gaius, Thursday, 6 September , 2007 @ 10:16 pm

  Yes, they do - or if they are uncomfortable, they make excuses anyway.

Other Links to this Post

1. Blue Crab Boulevard » An Open Letter From Robert Mugabe — Thursday, 13 September , 2007 @ 9:53 am