A prominent Harare economist has warned that the Zimbabwean dollar, now trading in the informal market around Z$2,000 to the U.S. dollar, could slide to Z$4,000 by the end of December and plummet to Z$180,000 by the end of 2007.
Economic consultant John Robertson said the country's economic decline will continue unless the government institutes bold economic and political reforms.
The official exchange rate was set at Z$250 to the U.S. currency on July 31 when the Reserve Bank of Zimbabwe devalued and lopped three zeros off the currency. The official rate has not been adjusted since then despite parallel market losses.
Robertson said in an interview with reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe that his currency projection was not overly pessimistic given the country's huge fiscal overruns and chronic extreme shortages of hard currency.
The International Monetary Fund has said Zimbabwean inflation will exceed 4,000% in 2007 unless major changes are made in economic, fiscal and monetary policy. Central Bank Governor Gideon Gono has predicted inflation will fall to 50% next year.
IMF Africa Department Deputy Director Siddharth Tiwari has said there are no limits to how high inflation could go barring serious corrective measures by Harare.