Workers Get Abortion Tra vel; Zimbabwe’s Inflation

Zimbabwe’s central bank has raised rates by a world-record 120 percentage points, to a current rate of 200%, in order to tame triple-digit inflation, amid a global trend of central banks countering inflation with interest rate hikes.

The Russia-Ukraine conflict has caused energy and food prices to soar worldwide. But Zimbabwe’s weak currency has made its situation especially problematic. Earlier this month, the falling Zimbabwean dollar (ZWL) caused its annualized inflation rate to jump nearly 60 percentage points to 191.6% — the third-highest rate globally.

“Businesses operate on borrowed funds so really with interest rates at 200% it is going to be difficult to fund their activities,” said Kurai Matsheza, president of the Confederation of Zimbabwe Industries, the largest business membership organization for manufacturing firms in the country, in an interview with OZY.

Matsheza noted that, if businesses borrow at 200% interest, ultimately they will transfer the higher costs to the final consumer. “So really, it’s the consumer who is going to suffer. Some businesses are going to fail to operate, and those who do operate … will see prices going up.”

Zimbabwe's economy is dependent on agriculture and mining, and on manufacturing firms that produce critical supplies for those sectors.

The Commonwealth, an association of 56 nations in Africa, Europe and elsewhere, has called on the G20 to implement the Common Framework to deliver debt relief for vulnerable countries. Initially developed in 2020 to address the devastating economic effects of the COVID-19 pandemic, the Common Framework is a program intended to offer debt deferment to low-income nations. This request was announced at the 26th Commonwealth Heads of Government Meeting that took place last week in Kigali, Rwanda. (Source: Commonwealth)

In guidelines published Monday, the U.S. Office of Personnel Management says federal workers will be allowed to travel to obtain healthcare as part of their sick leave. The new rules follow last week’s controversial Supreme Court overturn of the 1973 Roe v. Wade decision that had protected Americans’ constitutional rights to privacy and abortion. “An agency must grant sick leave to an employee for the employee to receive medical examination or treatment,” reads part of the new guidelines, which are viewed as an effort by President Joe Biden to set standards for private sector firms to follow. (Source: Bloomberg)

On Sunday, Ecuador's Energy Minister Xavier Vera-Grunauer made the announcement that “due to the acts of vandalism, takeover of wells and closing of roads, supplies and diesel necessary to maintain operations has not been possible.” The country was pumping 520,000 barrels of oil daily prior to the largely indigenous-led, nationwide protests that began on June 13 with demands for food, fuel and other vital resources. As protesters blocked roads and vandalized oil wells, President Guillermo Lasso agreed to cut fuel prices by 10 cents per gallon. According to the U.S. Energy Information Administration, as of January 2021, Ecuador had the third-largest crude oil reserves in Latin America, at 8.3 billion barrels. (Sources: Reuters, Bloomberg)

Japan’s rainy season has ended early and the mercury has risen. According to Reuters, earlier this week Tokyo’s downtown temperatures stood at 35.1 C (95.2 F) and 39.8 C (103.6 F). The country now faces insufficient generating capacity and possible outages. “Electricity demand has been staying above yesterday's forecast since this morning, amid unseasonably intense heat,” said a government official at a Monday press conference. (Source: Reuters)

The Sri Lankan government will limit fuel to essential needs until July 10 amid worsening shortages. “Port, health services [and] food transport will be provided petrol and diesel while all other sectors are requested to stay at home and provide services online in this difficult time,” cabinet spokesman Bandula Gunawardena said in a televised statement. He added that the country is facing an unprecedented financial and foreign exchange crisis. According to Bloomberg, Sri Lanka will send envoys to Qatar and Russia for fuel supplies and is working on getting a $500 million lifeline from India to import oil. Sri Lanka’s economy has suffered since the country defaulted on foreign loans earlier this year, with poor government management seen as the cause. The Russia-Ukraine conflict exacerbated conditions with its resulting higher prices and commodity supply chain disruptions. (Sources: Reuters, Bloomberg)

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European Commission President Ursula von der Leyen and U.S. President Joe Biden have announced a goal to distribute 1.5 million energy-saving smart thermostats to European households this year as part of efforts to withdraw from Russian gas. Europe has long relied on fuel from Russia and continues to pump money into the Russian economy with its purchases. The joint announcement pertains to economic sanctions that have forced Russia to default on its foreign debt for the first time in more than a century. (Sources: The Wall Street Journal, The White House)

French President Emmanuel Macron says both Saudi Arabia and the United Arab Emirates (UAE) lack the capacity to substantially increase oil production. Earlier this week, from the sidelines of the G7 Summit, Macron said UAE President Sheikh Mohammed bin Zayed Al Nahyan had told him the two Middle Eastern nations have limited ability to expand supply. The news caused oil prices to jump $2 per barrel to above $115 amid a constrained global supply of the fossil fuel. (Source: Reuters)

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