Reserve Bank of Zimbabwe Governor Gideon Gono on Thursday announced what amounted to a 98% devaluation of the national currency for exporting businesses but remained adamant he was not devaluing the Zimbabwe dollar across the board. He also revealed that inflation surged to an annual rate of some 2,200% in March.
"I'm saying..there is no devaluation, there is not going to be an exchange rate movement" from the official exchange rate of Z$250 to the U.S. dollar that has applied since the central bank rolled out a currency overhaul on July 31, 2006, Gono said in announcing the partial measures at an international trade fair in Bulawayo.
But under the guise of "drought mitigation" he introduced an effective exchange rate of Z$15,000 to the U.S. dollar for exporters and other businesses generating foreign exchange including the tobacco growers and mining firms that account for the bulk of the economically blighted country's much-diminished foreign exchange earnings.
The new rate will also apply to currency transactions of humanitarian and other nongovernmental organizations and embassies, as well as Zimbabweans living abroad in the so-called diaspora who remit funds to family and friends in the country.
In the course of detailing his interest-rate policy the central bank governor revealed what the Central Statistical Office has been withholding for the past week or more – that inflation as many economists expected had reached some 2,200% in March.
Gono seemed to back away from the statement in his last monetary policy statement on January 31 that Harare’s policies and actions, not targeted sanctions by the United States and Europe, were to blame for the country’s economic plight. Those remarks reportedly infuriated President Robert Mugabe and other top officials.
"It is a fallacy to say sanctions are only affecting those targeted," Gono said. "There can never be any greater height of intellectual dishonesty than to actually make this kind of a conclusion." Harare has blamed sanctions and drought in recent years for the collapse of the economy, but Western critics say the steep decline since 2000 resulted from a crash land reform program that sowed agricultural chaos.
Economic Affairs Secretary Mufandaedza Hove of the opposition Movement for Democratic Change faction led by Morgan Tsvangirai said Gono has all but devalued the currency, telling reporter Blessing Zulu of VOA’s Studio 7 for Zimbabwe that piecemeal economic management would not turn the economy around.
Deputy Information Secretary Abhednico Bhebhe of the MDC faction headed by Arthur Mutambara said Gono's statement lacked substance on rescuing the economy.