Restaurant customers in Zimbabwe pay with thick wads of local currency bulging in their bags and pockets. Real estate buyers hand over deposits of millions of Zimbabwean dollars stuffed into suitcases and car trunks.
Newspaper advertisements have begun offering currency counting machines for sale. With inflation out of control and a massive shortage of hard currency, the value of the Zimbabwe dollar has imploded in the
latest sign of the nation’s economic collapse.
One local commentator said the country’s economic misery was approaching the levels of Germany’s 1920s Weimar Republic.
”We are looking at total meltdown. It could in the next few months push the country into absolute collapse,” said Harare political analyst Brian Raftopoulos.
On the black market, the value of the Zimbabwe dollar fluctuated wildly on Monday. By the afternoon, $1 bought 1 800 Zimbabwe dollars, down from Friday’s 1 500 to 1 rate and up from 2 100 to 1 earlier in the day.
”The rate is changing by the hour,” said one black market dealer on condition of anonymity. The fixed official rate stands firm at 55 to 1.
Meanwhile, exasperated officials at the central bank are running out of local currency as black marketeers and money launderers withdraw massive amounts of untraceable bank notes to buy hard currency with.
The central bank officials said they would monitor large cash withdrawals from banks of more than 500 000 Zimbabwe dollars in a bid to trap them.
The government has repeatedly refused to devalue the currency. Unofficial trading has been spurred by a severe hard currency shortage stemming from political instability that has disrupted the main hard currency earning industries: tobacco, tourism and gold mining.
Independent economists say the black market exchange rate has been pushed up by desperate state enterprises seeking hard currency at unofficial rates to pay debts for oil, imported electricity and external fees and debts owed by the state airline. Many of those debts face foreclosure and the termination of supplies and services.
The central bank said last week it deferred a decision on issuing a 1 000 Zimbabwe dollar bank note until after the retirement at the end of the year of Leonard Tsumba, the bank’s governor.
The highest existing bill is 500 Zimbabwe dollars. With official inflation at a record 140% and forecast to rise to at least 500% early next year, the biggest Zimbabwe note, red in color, has become known as a Ferrari.
Thousands of cars were not going anywhere in Harare on Monday. Biting gasoline shortages disrupted commuter transport and left long lines of cars, buses and trucks snaking around city blocks and side streets in the capital and most other urban centers.
Travellers reported no gas at stations along the 250 kilometre main route from the eastern border town of Mutare to Harare.
Oil industry executives say the shortages have been caused by the dearth of hard currency to pay for state-controlled imports and the near-collapse of a deal with Libya that would supply 70% of the country’s monthly gasoline requirements.
The state National Oil Company holds a monopoly on imports and has pegged gas prices in a bid to stem inflation. Petrol in Zimbabwe is the cheapest in the region at about 15 US cents a litre, half the price of locally produced milk or beer. Gas imports are being heavily subsidised by the state. Private
oil industry executives say on the open market gas would be bought and shipped into the landlocked country for up to about $1 a litre, raising the consumer price by 600%.
Without a heavy price increase, shortages will continue, analysts say. Such a hike in the crumbling economy would lead to more business shutdowns and worsening unemployment, food shortages and social
upheaval.
At least 6,7-million Zimbabweans, more than half the population, face hunger in coming months because of a sharp drop in agricultural production blamed on a drought and the government’s seizure of thousands of white-owned commercial farms.
The government’s policy to freeze prices of food and essential commodities has mostly failed. Street dealers sell 10 kilograms of scarce corn meal, the staple food, for about three times the fixed price. Bread and sugar fetch up to four times the government’s price.
Those who can’t afford the black market prices wait on long lines for price controlled food. Often fruitlessly. – Sapa-AP