Guided by: Prof Suhas V

Jitesh Choudhary
Ashish Sawalakhe

76
87

Anilkumar Jain
Atul Roy

96
97

Manish Jha
Tejaswini Gupta

98
103

If You Need Something & Have Cash You Buy It . If You Have Cash You Spend It Today Because Tomorrow Its Going To Be Worth 5% Less

- Mike Davis(Combined Harare Resident Association)

Agenda:
a. b. c. d. e. f. g. Introduction Hyperinflation in Zimbabwe Root Causes Statistical Data Consequences Solution Conclusion

Inflation is defined as a sustained & appreciable rise in the general price level
Types of Inflation: Galloping Inflation Hyper Inflation Moderate Inflation

Beginning:
Until 2000, Zimbabwe was one of SubSaharan Africas best performing economies.
In fact, the countrys long-run growth record is unimpressive, even by SubSaharan standards, which are dismal.

 Over the long haul (1965-2008) real per capita

incomes have fallen more than 20% meaning that Zimbabweans are no better off today than 50 years ago.
The chart tells the story.
2500

2000

1500 PCY

1000

500

0 1965 1974 1979 1981 1991 1997 2008est

 Government reports 66,212% rate of inflation in

February 2008
At that time IMF believes its closer to 150,000% & now it

is around 3.2bn%
Hyperinflation diminishes savings
Shortage of basic goods

Annual Inflation in Zimbabwe

1200
Inflation, Consumer Prices (annual %)

1000 800 600 400 200 0 0 5 10 15 Year 1980-2006 20 25 30 Series1

 Rapid uncontrolled increase in :

inflation rate
nominal money growth

http://funtasticus.com/20080326/hyperinflation-in-zimbabw

 Citizens cannot hold more than Z$500 million in

cash
Companies may not settle bills over Z$250 million

Governments attempt to control money supply and put cash barons out of business

 Land reforms Government price restriction

Exchange rate instability

Printing of money

 Reallocation of land owned by white commercial

farmers to local citizens New owners lacked the knowledge or means to farm production Most of the land was actually given to government officials

 Citizens cannot hold more than Z$500 million in

cash Companies may not settle bills over Z$250 million RBZ declared inflation "illegal", for any raise in prices on certain commodities between March 1 and June 30, 2007. Officials have arrested executives of some Zimbabwean companies for increasing prices on their products.

 Government printed ZWD 21 trillion in order to

buy foreign currency to pay off IMF arrears

Printed ZWD 60 trillion to finance 300 percent

increase in salaries for soldiers and policemen and 200 percent for other civil servants

Statistical Data of Zimbabwean Economy

15 10 5 0 -5 -10 -15
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Percentage per annum

5500 5000 4500 4000 3500 3000 2500 2000 1500

Z$ (1990)

19 85 19 90 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 f

5500 5000 4500 4000 3500 3000 2500 2000 1500

Z$ (1990)

19 85 19 90 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 f

1000

1100

1200

1300

1400

700

800

900

Employment (000)

1980 1985 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

8000 7000 6000 5000 4000 3000 2000 1000 0

Z$ (1990)

19 85 19 90 19 95 20 00 20 01 20 02 20 03 20 04 20 05 -e st

 Prices in Zimbabwe are doubling constantly Hyperinflation = 2.2m per cent annually 50 billion Zimbabwean dollars = 70 American cents

 Most Zimbabwean workers currently make $2 a

month

This salary can buy merely 2 loaves of bread

The Reserve Bank of Zimbabwe had capped

maximum daily withdrawals at 500,000 Zimbabwean dollars: about 25 U.S. cents

 Stop printing money Dollarization

Currency board
Free Banking

Thank You