Zimbabwe is running out of gas

Times:

Fuel supplies in Harare have all but dried up after service stations refused to accept the country’s wildly unstable currency in payment.

A handful of outlets in the Zimbabwean capital were serving drivers for local currency at about Z$150,000 a litre, roughly five times the price of fuel a month ago. Blackmarket currency trading, which has almost overtaken the formal banking sector, began petering out as the exchange rate for the US dollar began to double almost every day.

Last week international aid organisations operating in Zimbabwe gave warning that the country’s economy was heading for full-scale collapse, with the currency becoming unusable and shops and services shutting down.

After decades of reckless economic mismanagement – including an official policy of printing money as fast as it can be done – dictated by President Mugabe, Zimbabwe has lurched into hyperinflation in the past few months. Annual inflation in May was at 4,500 per cent, according to official statistics, which are regarded as very conservative.

“This indicates we are on the slippery slope and it’s coming to an end now,” John Robertson, an economist, said. “It’s an accumulation of things for which the Government has no answer. It cannot ‘discipline’ the economy like it does its people.”

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The US ambassador to Zimbabwe thinks the government will collapse later this year as inflation rates reach impossible numbers.

Zimbabwe's inflation will rocket to 1.5m% before the end of the year, the US ambassador to Harare predicted yesterday, forecasting massive disruption and instability that will drive President Robert Mugabe from office.

In a telephone interview with the Guardian, Christopher Dell said prices were going up twice a day, sapping popular confidence in a government which is now "committing regime change on itself".

"I believe inflation will hit 1.5m% by the end of 2007, if not before," Mr Dell said. "I know that sounds stratospheric but, looking at the way things are going, I believe it is a modest forecast."

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Modest sounds sort of British. I think and American would say it was a conservative estimate. Whatever you call it it is difficult to see how much longer the country can sustain that kind of inflation. It is a clear sign that the economy has no confidence in the current governement, which is certainly understandable.