kimkay says
The financial crisis was triggered by Mugabe's decision to seize agricultural land owned by British settlers and redistribute it to the war veterans and poor working class. Mugabe had been under intense pressure from war veterans since independence in 1980. From around 1990 the pressure increased dramatically threatening his grip on power so he finally succumbed in 2004 after 23 years!
The immediate result was a huge reduction in the quantity of agricultural output since huge commercial land was divided up into smaller units that were less efficient and used less effective farming methods.
The contraction in agricultural output led to a fall in export revenues and less revenue for the government.
Pressure was then brought to bear on the Zimbabwean government by the international community for the way in which Zimbabwe had decided to handle the land issue.
Sanctions were imposed by the US and European Union. The IMF and World Bank froze all loan disbursements. Then a massive drought hit the entire Southern Africa.
Zimbabwe found itself unable to satisfy its financial obligations. It could not raise enough revenue because the agricultural mainstay of the economy was not operating effectively and access to foreign markets had been denied. Further, the government could not borrow from the World Bank or IMF due to its poor political record.The national debt hit 100% of its Gross Domestic Product and in September of 2001, the IMF released a press release declaring Zimbabwe ineligible to use IMF resources.
What did Mugabe do? He begun printing money to plug the budgetary shortfalls and repay the national debt. This is when inflation spiralled as follows;
from 32% in 1998,
33% in 2004,
585% in 2005,
passed 1000% in 2006,
26000% in November 2007,
11.2 million percent in 2008 !
Have i covered it all?
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