THE SMART NEWS SOURCE | Feb 10 2010 04:12 | LAST UPDATED Feb 10 2010 04:12

ADVERTISE WITH US | CONTACT US | STORY TIP-OFFS | M&G NEWSLETTER

News \| Africa \| Southern Africa

Zim bank chief plans currency reforms

ANGUS SHAW | HARARE, ZIMBABWE - Jul 27 2008 15:47

3 comments | Post your comment

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.

CONTINUES BELOW

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.

Appeal
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

TOPICS IN THIS ARTICLE

Places

Harare

People

Robert Mugabe

Comments

Botswana should ask Swaziland for financial help to assist with their refugees fleeing from Zimbabwe. After-all, Swaziland must be definitely flush with money if it can afford countless luxury German cars for the king, his numerous wives and other family members. Oh i forgot, this is africa, where the leaders and their family members are expected to live in palaces and the lap of luxury, whilst their people starve and are crippled with diseases such as rampant AIDS. What a continent. Sure enough however, next year the African begging bowl will be out yet again for the western taxpayers to fork out more aid. Which never ever seems to reach the people it is meant for.

Frank Hartry on July 27, 2008, 6:52 pm

Thank you to the Government of Botswana for doing the right thing! If only the ANC had balls like them Africa would be able to finally turn the corner and take her rightful place in the international community. Instead the SA govt. continues to kowtow to Mugabe and his brutal thugs not unlike a man who knows that his neighbour sexually molests his 5 yeear old child every night yet chooses to not intervene decisively. Shame on us, I am ashamed to be a South African!

Cliff Smith on July 27, 2008, 8:23 pm

How does Zimbabwe's Central Bank simply remove a 'train of zeros' from a preposterously inflated currency and expect intensely bad sentiment to just abate and value to take it's place because of a newly fledged agreement.

There will no doubt be renewed investment interest in the 'New Zimbabwe' but start some where around the bottom of the pile with your newly 'value added' Zim dollar Mr.Gono.

After your Zanu PF gang of thugs have stopped murdering your innocent fellow brothers and sisters you might consider it a start by giving farms and businesses back to professionals.

It might just help with a zero or two over time.

Cliff Slabbert on July 27, 2008, 10:40 pm

You must be logged in to comment. Log in or sign up to comment

click here to log in

M&G Online Comment Guidelines In Brief

No hate speech;
No racist, sexist or homophobic remarks;
Keep it short;
Keep it on topic;
Show respect to all;
We reserve the right to remove or delete any comment without notice or reason.

Click here for the full Comment Guidelines

Advertising Links

Click hereÖ

Your M&G Online

Follow the Mail & Guardian on Twitter!

Direct message us on our mailandguardian account to chat to the M&G Online team.


		THIS WEEK'S PAPER Subscribe Subs promotions Get digital edition

Advertising links

OUDE MEESTER INSURANCE JUNCTION PROPERTY FOR SALE INTERNET SOLUTIONS COMPAQ LAPTOPS	MAP SEARCH HOLIDAY FINDER BID OR BUY INSURANCE YOU CAN TRUST

Zim bank chief plans currency reforms

Related Articles

Tags

Places

People

M&G Online Comment Guidelines In Brief

Your M&G Online

Advertisements

Advertising links