Hyperinflation in Zimbabwe

Hyperinflation in Zimbabwe is an ongoing period of currency instability in Zimbabwe which, using Cagan's definition of hyperinflation, began in February 2007. During the height of inflation from 2008 to 2009, it was difficult to measure Zimbabwe's hyperinflation because the government of Zimbabwe stopped filing official inflation statistics. However, Zimbabwe's peak month of inflation is estimated at 79.6 billion percent month-on-month, 89.7 sextillion (${\displaystyle 8.97\times 10^{22}}$) percent year-on-year in mid-November 2008. At that time, a $100 trillion bill could not pay for a simple bus fare.

In April 2009, Zimbabwe stopped printing its currency, and currencies from other countries were used. In mid-2015, Zimbabwe announced plans to have completely switched to the United States dollar by the end of that year.

In June 2019, the Zimbabwean government announced the reintroduction of the Real Time Gross Settlement dollar (RTGS), to be known simply as the "Zimbabwe dollar", and that all foreign currency was no longer legal tender. By mid-July 2019, inflation had increased to 175%, sparking concerns that the country was entering another period of hyperinflation. In March 2020, with inflation above 500% annually, a new task force was created to assess the currency problems. By July 2020, annual inflation was estimated to be 737%.

On 18 April 1980, the Republic of Zimbabwe was born from the former Republic of Rhodesia. The Rhodesian dollar was replaced by the Zimbabwean dollar at par value. When Zimbabwe gained its independence from the United Kingdom, the newly introduced Zimbabwean dollar was initially more valuable than the United States dollar at the official exchange rate. However, that did not reflect reality because, in terms of purchasing power on the open and black markets, it was less valuable, due primarily to the higher inflation in Zimbabwe. In its early years, Zimbabwe experienced strong growth and development. Wheat production for non-drought years was proportionally higher than previously, and the tobacco industry was thriving. Economic indicators for the country were strong.

From 1991 to 1996, the Zimbabwean ZANU–PF President Robert Mugabe embarked on an Economic Structural Adjustment Programme (ESAP) that had serious negative effects on Zimbabwe's economy. In the late 1990s, the government instituted land reforms in the name of anti-colonialism intended to evict white landowners and place their holdings in the hands of black farmers. However, many of the new farmers had no experience or training in agriculture. Many farms simply fell into disrepair or were given to Mugabe loyalists. From 1999 to 2009, the country experienced a sharp drop in food production and in all other sectors. The banking sector also collapsed, with farmers unable to obtain loans for capital development. Food output fell 45%, and manufacturing output fell by 29% in 2005, 26% in 2006 and 28% in 2007. Unemployment rose to 80%. Life expectancy dropped. Much of the nation's middle class fled the country en masse taking much of the nation's capital. The Reserve Bank of Zimbabwe blamed the hyperinflation on economic sanctions imposed by the United States of America, the IMF, and the European Union. These sanctions affected the government of Zimbabwe, asset freezes and visa denials targeted at 200 specific Zimbabweans closely tied to the Mugabe regime. There were also restrictions placed on trade with Zimbabwe, by both individual businesses and the US Treasury Department's Office of Foreign Assets Control.

A monetarist view is that a general increase in the prices of things is less a commentary on the worth of those things than on the worth of the money. This has objective and subjective components:

Crucial to both components is discipline over the creation of additional money. However, the Mugabe government was printing money to finance military involvement in the Democratic Republic of the Congo and, in 2000, in the Second Congo War, including higher salaries for army and government officials. Zimbabwe was under-reporting its war spending to the International Monetary Fund by $22 million a month.

Another motive for excessive money creation has been self-dealing. Transparency International ranks Zimbabwe's government 157th of 177 in terms of institutionalised corruption. The resulting lack of confidence in government undermines confidence in the future and faith in the currency.