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07 Aug 2003 14:07
The government made the unprecedented move of unveiling a range of new travellers’ cheques in huge denominations on Thursday, which it said would ease acute shortages of local currency in Zimbabwe where the economy is hovering on the brink of collapse.
The Reserve Bank said the cheques in denominations of up Z$100 000 are to be launched on Friday and will be legal tender accepted by major stores and businesses.
The largest Zimbabwe bank note, the Z$500 bill, has been in short supply for several weeks, prompting long lines outside banks. Banks have rationed withdrawals to Z$5 000, or $ 0,60 at the official exchange rate of 824-1 or $ 0,12 at the black market exchange rate of about 4 000-1.
The Reserve Bank did not say how much money would be available
in the new travellers’ cheques that would be valid only in Zimbabwe.
Zimbabwe is suffering its worst economic crisis since independence in 1980, with official inflation at 365%.
Unofficial estimates that take into account thriving black market trading in scarce food and gasoline put inflation closer to 700%.
The Reserve Bank announced last month it planned to issue a Z$1 000 bank note by October.
Local currency shortages are blamed on out of control inflation, the central bank’s inability to print money quickly enough and the hoarding of cash amid uncertainty in the crumbling economy.
In the past, the Reserve Bank has repeatedly balked at suggestions to issue larger denomination bills, saying that it would prompt psychological jitters and further fuel inflation. Similar to bank notes, the travellers’ cheques are printed on security paper with fibres visible under ultraviolet light, the Reserve Bank said Thursday.
Tony Hawkins, a Zimbabwean economist, said the new cheque denominations of 5 000, 10 000, 20 000, 50 000 and 100 000 appeared to be an attempt to get around printing new bills.
“It’s bizarre. Whether companies will be happy to accept the cheques remains to be seen. Travellers’ cheques have always carried a high risk in respect of fraud,” he said.
Executives at private banks say they have been receiving less than 10% of the required cash from the central bank to cope with daily withdrawals.
Riot police routinely patrol long lines of frustrated Zimbabweans desperate to cash paycheques or make withdrawals. As customers also write more regular cheques than usual, banks have said they are running out of chequebooks. Banks that normally issue new chequebooks within 48 hours, say there is now a month-long waiting list for new cheques.
Part of the deepening economic crisis is blamed on the state programme that seized thousands of commercial farms from the white minority for redistribution to black settlers.
Foreign investment and aid have largely ended in protest of human rights abuses and the disputed presidential elections last year that gave embattled President Robert Mugabe another six-year term in office. - Sapa-AP
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