[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Tuesday, 1 May 2007, 14:54 GMT 15:54 UK
Cost of maize in Zimbabwe to rise
Zimbabwean farmer holds a dried corncob
Maize costs are rising to increase pay for farmers of the grain
The cost of maize, a basic food staple, in Zimbabwe will rise seven-fold, the country's government has announced.

The price of a 10-kilogram bag of the grain will now cost more than 41,000 Zimbabwe dollars ($2.80; 1.40), from just over 6,000, a minister said.

The huge rise in the price of maize comes after inflation in Zimbabwe reached 2,200% in March.

A top economist at the IMF has said the "unsound" central bank is to blame for the economic chaos in the country.

'Technically broke'

Agricultural Minister Rugare Gumbo said the big price rise reflected pay rises for farmers to support maize production.

But the steep increase could fuel growing anger among critics of President Robert Mugabe's regime, who they accuse of destroying a once-prosperous country.

An economist at the International Monetary Fund (IMF) has accused Zimbabwe's central bank of driving up inflation in the country by pumping out money to fund a range of government policies not accounted for in the budget.

These include having a dual exchange rate policy, with one rate for official government transactions and another for ordinary consumer purchases, which is ultimately disadvantageous as it results in foreign exchange losses.

In a Working Paper released last month, IMF economist Sonia Munoz said the Reserve Bank of Zimbabwe (RBZ) was "technically broke" and was risking "hyperinflation" if it continued to follow the ruling party's fiscal agenda.

Ms Munoz called on the RBZ to eliminate its loss-making off-budget activities and restructure its functions.

RBZ governor Gideon Gono shrugged off the criticism, refusing to cut off-budget spending, particularly in relation to supporting the country's farmers.




FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

PRODUCTS & SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific