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Zimbabwe Cuts Policy Rate as Inflation Falls

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Picture: REUTERS/Philimon Bulawayo (ZIMBABWE) – A black market currency trader shows off U.S. and Zimbabwean bank notes in the capital Harare.

By Roman Sanin

Zimbabwe has been under Western sanctions for more than 20 years, with the population experiencing the devastating effects of an economic crisis in the country, which has been attributed by Zimbabwean authorities in particular to the West’s “illegal” restrictions.

The central bank of Zimbabwe has lowered its policy rate from 200% to 150%, as the inflation rate in the country is decreasing.

According to the bank, the country has been seeing the inflation rate drop since the last quarter of 2022. In January, monthly inflation amounted to 1.1% in contrast to 2.4% in December.

“The moderation in interest rates is important and necessitated by the downward trend in the month-on-month inflation since the last quarter of 2022,” said the central bank.

The bank expects to see the inflation rate continue to drop in the following months.

Along with hyperinflation, that reached its peak in November 2008, amounting to over 500 billion percent, Zimbabwe is experiencing a number of other issues related to high unemployment, agricultural decline, limited access to credit, and shortages of basic goods.

The majority of the current economic hardships of the country are being attributed by the authorities to the US and its allies’ sanctions, imposed against Harare at the beginning of the 21st century under the pretext of fighting “violence, the intimidation of political opponents and harassment of the independent media” in the Southern African country.

According to current estimations, Zimbabwe has lost over $42 billion in revenue due to the Western sanctions.

” This includes lost bilateral donor support estimated at US$4.5 billion annually since 2001, US$12 billion in loans from the International Monetary Fund, the World Bank and African Development Bank, commercial loans of US$18 billion and a GDP reduction of US$21 billion,” a report by the Southern African Development Community (SADC) mission in Geneva issued in 2020 pointed out.

The sanctions came right after the deterioration in relations between the West and Zimbabwe under the rule of Robert Mugabe in 2000 because of the Zimbabwean president’s land reform, which sought to redistribute the land from white farmers to landless indigenous Zimbabweans in a bid to shed the country’s colonial legacy.

When Mugabe left office in 2017, the West did not lift the sanctions, with the incumbent US president, Joe Biden saying in 2022 that his administration would not ease the sanctions, saying Zimbabwe is a threat to US foreign policy.

The statement from Washington comes despite the UN Human Rights Council estimations, according to which “unilateral sanctions decimated the economic performance of the country, thereby aggravating the humanitarian situation and consequently adversely impacting access to basic rights, including to life, food, water and sanitation, health and education, and the rights of Zimbabwean residents, migrants and refugees…”.

This article was first published in Sputnik.