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IMF Official Warns Zimbabwe Consumer Inflation Headed For 100,000%

A senior International Monetary Fund official warned this week that hyperinflation in Zimbabwe could reach a year-on-year rate of 100,000% by the end of 2007, while the country's central bank announced the issuance of a Z$200,000 bank note.

IMF Director for Africa Abdoulaye Bio Tchane - whose earlier forecast of 4,000% inflation has been borne out - told Reuters he saw it reaching 100,000%.

Zimbabwe's Central Statistical Office has stopped releasing inflation data, but its last report for April of this year put it at 3,700%. The government has announced that it is restructuring the statistical office and officials have stated that Harare's controversial campaign to lower prices by decree has turned the tide on inflation.

Bio Tchane said Zimbabwe's economic prospects are "bleak" and said the draconian price controls are likely to exacerbate shortages and further stoke inflation. An IMF spokeswoman confirmed Bio Tchane's remarks were correctly reported.

With Zimbabwe inflation the highest in the world, the Reserve Bank of Zimbabwe said it would put a new Z$200,000 bearer cheque or note into use starting Wednesday.

Economists blame inflation on massive government money printing to pay government expenses – but President Robert Mugabe was recently quoted by the state-run Herald newspaper as saying he wants to print more money to fund municipal projects.

Economist Tony Hawkins of the University of Zimbabwe told reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe that it has become harder to estimate actual inflation in the absence of any official data releases.

More reports from VOA's Studio 7 for Zimbabwe...