Zimbabwe’s economic decline has been punctuated by several notable events and episodes. One of these was the Fast-Track Land Reform Program of 2000, under which land was seized from white farmers.
This confiscation had been happening since 1980, but under this program, the farms were taken without compensation. Zimbabwe’s Supreme Court declared the program unconstitutional, but Mr. Mugabe’s government ignored that ruling.
This flagrant abuse of property rights and the rule of law sent the economy into a deep dive. From 2000 to 2008, real GDP. per capita contracted on average by 8.29 percent per year. During this period Zimbabwe ran large fiscal deficits financed by printing money and experienced the second most severe case of hyperinflation in history.
On Nov. 14, 2008, the annual inflation rate peaked at 89.7 sextillion percent. Prices doubled every day, making Zimbabwe’s 100 trillion dollar notes worthless. In the end, the government was forced to scrap the Zimbabwean dollar, because Zimbabweans simply refused to use it.
Mr. Mugabe’s government then instituted a system in which the United States dollar became the coin of the realm. Government accounts became denominated in United States dollars in 2009. As a result of this dollarization and the installation of a national unity government in 2009, the economy rebounded.
That rebound persisted during the term of national unity government, which lasted till July 2013. During this period, real G.D.P. per capita surged at an average annual rate of 11.2 percent. The minister of finance, Tendai Biti, who was a member of the opposition, understood that under a dollarized regime, the country would no longer be able to print money to finance deficits. Consequently, budget deficits were almost eliminated.
With the collapse of the unity government and the return of Mr. Mugabe’s Zimbabwe African National Union-Patriotic Front party, old habits resurfaced. Fiscal deficit ballooned — something that should not happen under “dollarization rules.” But Mr. Mugabe would break any rule.
To finance its ballooning deficits, the government began to issue an enormous number of “New Zim dollars” in 2016. As night follows day, Zimbabwe experienced its second bout of hyperinflation in a decade.
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