there are 3 factors of hyperinflation as we can see in the country, Zimbabwe.
The first determinant is the government of Zimbabwe keeps on printing money to
pay for spending. Gideon Gono, governor of Reserve Bank of Zimbabwe (2003-2013)
says that traditional economic does not fully apply in the country. With this
claims, he comes out with an idea which is print and prints the money. This
decision had made the printing rate very fast until it is impossible to
calculate the rate of inflation.
Besides that, Robert Mugabe, first prime minister of
Zimbabwe in 1980 after the end of white rule, had power in the country and must
be protected, he had many soldiers and policemen keep him save. But the big
problem is, there is insufficient money to be paid for the civil servants.
Because of this problem, the government intends to start printing again.
Not only this, the aim of keep printing money is for
the war funding. Even as the economic condition in Zimbabwe continued to worsen
in 1998, Robert Mugabe still sends troops to back up the leader, Laurent
Kabila. Zimbabwe had participated in the Second Congo War, in the late 1990s.
In this war, Zimbabwe had spent approximately $22 million a month. This
involvement of war had drained many of the money that reserves in the wake of
the 21st century.
Zimbabwe government also response that printing money
is to pay for the high national debt due to the economic decline, the decline
in economic output based on agricultural and manufacturing which caused a
collapse in bank lending and the decline in export earnings because of
importing more. As a conclusion, the growth in money supply and the inflation
rate are positively related. So when the money supply in Zimbabwe increases,
the inflation rate increases. For example, during the time when Zimbabwe has
huge money supply because of keep printing money, the inflation rate of the
country had reached until 231 million percent at the year of 2008 before the inflation
rate had been tamed.
The second determinant is the land reform program.
From the news that we found, we can see that the rule in Zimbabwe has seen
periods of bloody brutally. Why this is happening is because under Robert
Mugabe leadership after Zimbabwe established out of the former British colony
of Rhodesia, Zimbabwe economic prosperity diminish due to the land reform. In
this land reform program, government redistributes the land from existing white
farmers to the black farmers. But this comes to a problem which is the new
farmers who are taking the land only have just a little knowledge about the
agriculture and related activities., so they do not know what to do on this
This decision had made a few impact over the years in Zimbabwe.
For example, annual wheat production in Zimbabwe which once stands at 300,000
tones in 1990 had decreased to 50,000 in 2007 and crops that earned almost $600
million in 2000 had decreased to $125 million in 2007.