Essay about Problem And Solution Of Zimbabwe

1134 Words Jan 29th, 2015 null Page
Problem and solution in Zimbabwe
Introduction
Inflation refers to rise or increase in prices and fall in the purchasing of the value of money. A problem tends to affect many countries worldwide. Among the countries that have been affected by this crisis, Zimbabwe is one of them. The problem always plunges many countries into long seasons of instability. It is one of the countries facing the problem of inflation for a longer period. The problem of inflation in Zimbabwe came because of bad government decisions on financial matters. This led to the rise of hyperinflation that always comes as result of inflation being extremely high and increasing at a rapid pace.

The hyperinflation led to speculation of money and basics such as food. By 2008, their dollars had become useless to conduct transactions (MarkWC, 2009, p. 1). According to Baumol and Blinder (2012, p. 122), in 2008 Zimbabwe inflation was 231million percent per annum. Land reallocation is also part of the reason Zimbabwe faced inflation problem. This because it redistributed agricultural tracts; leading to the depression of commercial farming. The out of farming fell up to the year 2009. It was the major reason for the decline of foreign exchange, cash crops and commercial production of maize, which is stapled food.

However, the other reason that contributed to hyperinflation was as result of the monetary authority borrowing money irresponsibly. The borrowed money was to pay for all of the expenses and funding the…

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