The Starving Millionaire

     Zimbabwe is a country with a population of about 13 million people in Africa, bordering on South Africa, Mozambique, Malawi, Botswana and Zambia. in Southern Africa, Mozambique and Zambia.








People in this country are facing difficulty in living. Having a death rate which ranks them at 13th in the world, the population is just not sustainable, causing Zimbabwe to experience a negative population growth, despite the fact that they have a fairly high birth rate. This is due to a failing the health care system. One of the causes of poor health condition in Zimbabwe is the high HIV infection rate and and 2011, there were 33.7% of the population aged 15-49 suffering from HIV. Zimbabwe has over a million orphans due to the death of their parents caused by the HIV epidemic and to avoid death from starvation, they have no choice but to rely on food aid from the World Food Programme. This phenomenon is a direct cause of the country's poor economy.
       

Zimbabwe is currently holding the position of the second highest inflation rates in the world. In 2009, the inflation rate of Zimbabwe reached the highest rate of the world of 24,000% compared to Myanmar. The reason for this is because the amount of money in economy is not supported by the growth in the output of goods and services. Printing money without reservation by the government of Zimbabwe will cause hyperinflation to happen. The intensive fall in money value in Zimbabwe causes their currency to lose its function as a medium of exchange completely, rendering the Zimbabwe dollar virtually dead.

Just imagine you have to bring so much money out just for an one day outing. 

NO KIDDING!

Zimbabwe Dollars

The Zimbabwean dollar is experiencing a rapid decline in value over the past eight years, the price of goods double at least once a day. Zimbabwean dollar has fallen out of everyday use, even the largest dominant of the Zimbabwean dollars was not able to buy a loaf of bread. 

There are once severe cash shortage because the government can't afford to print bank notes to keep up with the pace of the inflation.

Try notice that there is an expiry date on the note that states :" on or before 31st December 2008". This is because of  the rapid change in the inflation rate and the increasing price of the goods and services in Zimbabwe.





The monetary authority should be responsible by not borrowing money to pay all its expenses and funding quasi-fiscal activities to prevent the country from facing hyperinflation. The decreasing currency will also affect the crisis of confidence that result of the rejected of foreign investment. The U.S and Britain have partially withheld financial support for Zimbabwe by helping them in reforming government before any additional aid is offered.




References:

• http://www.africaecon.org/index.php/exclusives/read_exclusive/1/2
• http://www.newzimbabwe.com/pages/inflation180.17386.html
• http://www.cato.org/zimbabwe

Prepared by: Chong Hui Yi

Student ID: 0311644