Zim bank chief plans currency reforms

Zimbabwe’s bank chief plans new currency reforms—removing “more zeros” from the plummeting Zimbabwe dollar and raising the limit on cash withdrawals—to tackle the country’s runaway inflation and cash shortages, state media reported on Sunday.

Previous currency reforms have failed to tame Zimbabwe’s inflation—officially pegged at 2,2-million percent a year but estimated by independent analysts to be closer to 12,5-million percent. It also has become virtually impossible to get access to cash as the country’s economic collapse worsens.

Authorities last week released a new Z$100-billion bank note.

By Sunday it was not enough even to buy a scarce loaf of bread in what has become one of the world’s most expensive—and impoverished—countries.

The Sunday Mail, a government mouthpiece, reported that central bank reserve governor Gideon Gono told an agricultural show on Saturday he would introduce the new measures in the coming days to make sure cash shortages are a “thing of the past”.

Zimbabwe’s government says Western sanctions—tightened last week—are mainly to blame. Critics blame mismanagement by President Robert Mugabe’s government and a land-reform programme that slashed the country’s agricultural production.

To improve liquidity on the market, Gono was going to remove “more zeros”, the paper reported.

“This time, we will make sure that those zeros that would come knocking on the governor’s window will not return.
They are going for good,” Gono was quoted as saying.

In 2006, the central bank slashed three zeros from the currency when inflation stood at a few hundred percent, already the highest rate in the world then.

Computers, electronic calculators and automated teller machines at banks have not been able to handle basic transactions in billions—nine zeros—or trillions—12 zeros—or even quadrillions, with 15 zeros.

A new laptop computer was advertised on Sunday at Z$1,2-quadrillion. That’s the equivalent of about $25 000 at the official exchange rate, $8 500 at the black market cash exchange rate, or $2 000 at a third exchange rate used in electronic money transfers through bank accounts that don’t involve the physical issue of Zimbabwe dollar bank notes.

Zimbabwe’s money shortages, inflation and chronic shortages of food, fuel, medicine and most basic goods have brought many businesses in Harare to a standstill. Smaller shops and at least four main restaurants have shut down.

The state media reported on Saturday that nightclubs cancelling music shows because audiences dried up after a 2 000% increase in beer and soft drink prices in the past week. Several bars and clubs were openly accepting US dollars, even though that is against the law.

The Sunday Mail said Gono warned businesses against accepting hard currency.

“Dollarisation is not a position we have taken. We are not in that situation yet. Report all such persons to the nearest police station,” Gono said.

Shortages of local cash have worsened dramatically. Earlier this month, a German company, under pressure from the Berlin government, stopped selling bank note paper and printing software to Zimbabwe’s central bank.

Gono, according to the Sunday Mail, described the end of a 40-year-long contract to supply bank note paper as part of the West’s “devilish” economic sanctions against Mugabe’s government. The European Union last week tightened sanctions and the United States followed suit on Friday.

Central bank officials have indicated bank note paper was being sought in Asia and through neighbouring South Africa.

Botswana appealed for help on Sunday to ease the impact of an influx of Zimbabweans.

“The influx of Zimbabweans, whether there is or there is no government [in Harare], is an issue to be dealt with,” said Foreign Minister Phandu Sekelemani said on South African public broadcaster SAfm.

“We ask the international community to help us because it is a drain on our resources. Even after the failed presidential run-off, we have more 215 who crossed last week ... But we cannot turn them back once they qualify” for refugee status.

According to government sources late last year, Botswana was home to an estimated 250 000 Zimbabweans.

Sekelemani reiterated calls for Zimbabwe to be suspended from the Southern Africa Development Community (SADC).

“As a country that practices democracy and the rule of law, Botswana does not ... recognise the outcome of the presidential run-off election, and would expect other SADC member states to do the same,” he said.

“It is therefore Botswana’s position that Zimbabwe not be allowed to participate in SADC meetings until such time that they demonstrate their commitment to strictly adhere to the organisation’s principles.” - AFP, AP

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