History of hyperinflation in Zimbabwe. Hyperinflation occurs whenever a country's currency is created at a rate that is too high. The history of hyperinflation in Zimbabwe is long and one of a government slowly derailing. Originally, the Zimbabwe dollar had a high value. In fact, the Zimbabwe dollar has had a higher value than the US dollar since its origins in the 1980s.
The early years of Zimbabwe's economy were one of great growth and development. Various industries and crops flourished, and so did Zimbabwe's economy.
However, under the rule of President Robert Mugabe, the tide began to turn. In the early 1990s, with the help of the World Bank, Mugabe decided to create an economic structural adjustment program. This ESAP would start the gradual fall of Zimbabwe's currency. As a result of this readjustment, the government enforced various land redistributions and land reforms.This postponement of land reform would not only contribute to the decline of the economy; Many claim Mugabe's actions were racist. Mugabe's government took land from white farmers and redistributed it to black farmers to right the injustices of colonialism.
What Mugabe's government didn't know was that many of these black farmers were unwilling to tend to the new land, and so many crops and industries began to decline. Once these various crops and industries began to fall, the rest of the domino effect began. The banking sector collapsed as soon as the farmers could no longer get credit.The food production rate fell by almost half its percentage, and therefore production rates also fell. Eventually, unemployment rose to a staggering 80% and life expectancy fell. All these terrible consequences affected the monetary value of Zimbabwe currency for various reasons. The government has not honestly reported its spending to the International Monetary Fund, so there has been no record of the country's imminent demise.
Aside from the war effort, there were several other reasons for the eventual hyperinflation of the Zimbabwean currency. Due to the corrupt government, many officials were overpaid and people had no confidence in their government's abilities. This disloyalty towards a country's government tends to undermine confidence in the currency. The timeline of currency hyperinflation in Zimbabwe.
Follow this timeline for a glimpse of the time it took for Zimbabwe's currency to collapse. The very first Zimbabwean Dollar is created to replace the Rhodesian Dollar. A number of Zimbabwean banknotes are issued. Government begins attempting currency reform to curb inflation. The government is now making another attempt at currency reform by eliminating ten zeros from every Zimbabwe dollar.The third Zimbabwe dollar is now worth 10 billion old dollars - the second Zimbabwe dollar. However, despite this new implementation, inflation continues to rise.
The government issues it 1 million dollars. And the 100 million dollars.About ten days later, the government is slowly issuing the new banknotes 200 million dollars. Five days later, the government issued the 1 billion dollars. The new 20 billion dollars. The government hits new highs with the introduction of these new banknotes: the 10 trillion dollars. And even the 100 trillion dollar bill. The Reserve Bank of Zimbabwe adopts and introduces the fourth Zimbabwe dollar, which eliminates twelve zeros from old banknotes. Zimbabwe's currency is obsolete and no longer used.