THE Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono yesterday trashed his original inflation target figures, accusing the drought and abuse of Productive Sector Facility
(PSF) of derailing his progress.
Presenting the monetary policy review yesterday Gono revised his inflation target for the year-end to 50-80% up from the initial 20-35%, which he had set last year.
“The unfolding drought situation has, therefore, made it necessary that as Monetary Authorities we revise our annual inflation rate target from the previous 20-35% to 50-80% by December, 2005.
This is the first time that the governor has admitted his inflation figures were not achievable. Even though Gono blamed the drought and PSF abused for his failure analysts say excessive money printing and government spendthrift had contributed to climb down. Gono also hinted that under the current condition inflation might soon surge to about 200%.
“Whilst this is regrettable, the harsh realist is that failure to act now may result in the country seeing 200% inflation soon before it sees the 50-80% we are now projecting for this year,” Gono said.
Gono had in 2003 declared that he would reduce inflation from a high of 622,8% in January last year to 20-35% December this year.
Last month inflation started picking up from 123,5% in March to 129,1% in April – an upsurge which analysts say is likely to continue.
Despite reducing it from 622,8% to 123,7% in March this year, inflation has since started to climb on the back of serious food and foreign currency shortages.
Experts warned last year’s that the decline in inflation figures was artificial because it was based on prices of commodities not available in the shops.