But the country has been on a slide since 2005. This was probably due to the skewed exchange rate. In 2004, for example, when the central bank introduced an auction system, things almost returned to normal. Inflation dropped from 623 percent at the beginning of the year to 133 percent in December.
Though it dropped further to 123 percent in 2005, it has been on the increase since. Gono abandoned the foreign exchange auction system. The exchange rate was fixed and the parallel market rate began to spiral.
What is also interesting is that more foreign currency is now in the hands of commercial banks and not the central bank which implies that the big players could be commercial enterprises and not the central bank.
Out of the US$301.7 million that came in in 2003, the central bank used the bulk US$209.2 million. Payments for fuel were only US$37 million while electricity accounted for US$6.8 million.
Banks took the lion’s share in 2004. They accounted for US$964.6 million while the central bank used US$746.2 million. It spent US$155.6 million on fuel and US$92.4 million on electricity.
The situation was reversed in 2005 with the central bank using US$907.1 million and private banks US$795.8 million. The central bank spent US$231.1 million on fuel and US$69.5 million on electricity.
Last year the central bank spent US$135.4 million on fuel and US$84.3 million on electricity. It used US$740.3million while US$1 333 million was with commercial banks.
Loan repayments and payments to international financial institutions— the International Monetary Fund, the World Bank and the African Development Bank— have been modest. The central bank did not pay anything to the IFIs in 2003. It paid US$29.9 in 2004, a hefty US$169 million in 2005 and a paltry US$19.4 million last year.
Loan repayments, on the other hand, have been steady. They accounted for US$52.3 million in 2003, went up to US$122.9 million the following year, further up to US$165.1 million in 2005 and dropped to US$125.7 million last year.
With these figures, the question still remains: Who is playing havoc with the Zimbabwe dollar?
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