(Last Updated on January 30, 2013 by Editor)
ZIMBABWE – If you have more than $217 left in your bank account, chances are you are better off than Zimbabwe.
The African country has only $217 left in public bank accounts after paying public workers last week, according to Agence France-Presse.
There are cash-strapped governments and there are broke governments. And then there’s Zimbabwe, which, after paying last week’s government salaries, has just $217 left in the bank. No, we didn’t forget any zeroes to the end of that figure. Zimbabwe, the country that’s home to some of the world’s largest platinum and diamond reserves, literally has the same financial standing as a 14-year-old girl after a really good birthday party.
The country’s finance minister admitted as much in a press conference on Tuesday. “Last week when we paid civil servants there was $217 [left] in government coffers,” Tendai Biti told reporters. “The government finances are in paralysis state at the present moment. We are failing to meet our targets.”
So it seems. However, Zimbabwe is hardly a stranger to financial hyperbole. The economy started to come apart at the seams in 2000, when President Robert Mugabe seized the land of over 4,000 white-owned farmers, effectively dismantling the country’s agriculture industry. Over the course of the next decade, the country spiraled into an extended period of hyperinflation, the likes of which the world almost never sees.
It peaked in August 2008, when inflation reached 11,200,000 percent and economists around the world started to say that the country’s situation was hopeless. Prices were doubling by the day, and the government had to print Z$100 billion notes. The following year, they went ahead and printed Z$100 trillion notes, just before deciding to chop 12 zeroes off of the currency. A new coalition government formed that year and started on the long process of financial recovery, a process that is clearly going to take a little longer.
It’s unclear how the Zimbabwean government is going to get itself out this fiscal mess, but whatever it does, it needs to do it quickly. As Quartz’s Tim Fernholz points out, Zimbabwe is looking at a $104 million bill for its upcoming election. Its government is also dealing with brand new allegations that government officials have been running a corruption ring around the country’s diamond mines. The country obviously desperately needs a major change.
“But action against corruption probably won’t come until the end of Mugabe’s reign, and a new constitution coming up for a referendum this spring — presuming the funds can be found — might set up the aging autocrat for another term in power,” writes Fernholz.
Until then, looking for quarters under the couch isn’t going to cut it, so Zimbabwe is doing the only thing it can do. “We will be approaching the international community,” Biti said. You’ll never guess who’s most likely to come to the rescue. Hint: They’re big fans of rare minerals.
“Last week when we paid civil servants there was $217(left) in government coffers,” the country’s Finance Minister Tendai Biti told journalists in the capital Harare, AFP reported. Biti also noted that some of them had better bank balances than the state.
The government warned that the lack of cash would threaten next year’s elections, which will cost $104 million, according to the Quartz.
For almost three decades until the 2008 parliamentary elections, Zimbabwe was ruled by President Robert Mugabe and his Zimbabwe African National Union – Patriotic Front. Mugabe’s decision to seize almost all white-owned commercial farms led to steep production decline in the agriculture-based economy. The country suffers from rampant inflation, which hit 231 million percent in 2008, according to the Telegraph.
Now, the Zimbabwean economy has shown signs of recovery after a coalition government between President Mugabe and opposition leader Morgan Tsvangirai was formed in 2009. The country expects to expand its economy by 5 percent this year, the Quartz noted.
But Zimbabwe’s situation is still perilous. The country’s unemployment rate is as high as 95 percent, according to the Heritage Foundation, a Washington, D.C.-based think tank. It is also one of the most corrupt country in the world. Transparency International, a global organization fighting against corruption, ranked the country 163 out of 174 on its 2012 transparency index.