Zimbabwe pits currency against food price

 
Published: Sunday 15 June 2008

In the face of an economic meltdown, Zimbabwe has suspended import duty on basic commodities for 90 days, with effect from May 12.

The cost of imported basic commodities has sky-rocketed since the government floated the currency at an exchange rate of z $250 million to us $1. Previously the currency was at z $30,000 to us $1. Within a week of releasing the z $250 million note, the Reserve Bank of Zimbabwe introduced a bill to float z $500 million note. The country's inflation rate is at 200,000 per cent.

The decision came soon after the government revealed that the country's maize yield could go down to less than a million tonne this season due to heavy rainfall and inadequate supply of agricultural inputs. Maize is the staple food of Zimbabwe. To contain the situation, the government released thousands of tonnes of maize at heavily subsidised prices in the second week of May. But this triggered stampedes in shops and supermarkets in the capital, Harare.

Meanwhile, imf has warned African and Asian countries against using subsidies to tackle higher food prices as this could lead to further social unrest.

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