February, 24 (LBO) – The International Monetary Fund (IMF) has asked Zimbabwe not to print money and called for fundamental policy changes to stabilize its economy as inflation hit 1,600 percent in January, echoing advice given to Sri Lanka not so long ago. But Sri Lanka is trailing way behind Zimbabwe with inflation at only 20 percent, with both countries due meet at the cricket world cup next month.
Consumer price inflation in Zimbabwe hit 1593 percent in January 2007 and its exchange rate, officially at 250 Zimbabwean dollars to the US dollar, is changing hands unofficially in the ‘parallel’ market at 6,600 local units to the US dollar, up from 5,000 the previous month.
Last year the Zimbabwe struck three zeros off it currency notes as part of a cosmetic anti-inflation drive, while continuing to print money to finance a high budget deficit.
If not for the re-denomination, the currency would have been 6,600,000 units to the US dollar.
In addition to purchasing treasury bills to finance the state, The Reserve Bank of Zimbabwe also prints money directly for activities it has taken off the government’s budget and under its wing.