Zim rations cash
2003-08-18 13:52
Harare - Zimbabwe has outlawed the holding by individuals and merchants of cash exceeding Z$5m (US$6 250) in another bid to stem a cash crisis that has hit the country for four months, the central bank said on Monday.
"It will be a criminal offence for any individual to be in possession of cash exceeding five million dollars at any time," according to a notice published Monday by the Reserve bank of Zimbabwe summarising the new law.
"This cash may be in their physical possesion, on any premises or land or simply under their control," the notice said, adding that the regulation is effective from August 24.
Merchants and government-run companies that generate more than Z$5m in cash are required to deposit any surplus in a bank. They are also required to keep records which "clearly show their cash receipts on each day".
A crippling cash shortage and soaring inflation in Zimbabwe has resulted in long queues of people in banks and at automated teller machines trying to withdraw cash.
Cash issued at banks is now rationed, and sometimes daily allowances are just enough to buy five loaves of bread.
An underground market for domestic cash has sprung up, with Zimbabwe dollars being sold by individuals and traders at commission rates of up to 30%.
The cash crunch has led to near riotous situations at some banks, with irate clients breaking windows and glass doors after being turned away empty-handed after hours of standing in line.
Commentators say Zimbabweans are keeping their cash at home because of lack of confidence in the economy, which is in a downward spiral.
A thriving parallel foreign currency market has also been blamed for cash hoarding, with the US dollar fetching up to Z$4 800 on such markets against the official rate of one to 800.
In an effort to attract billions of Zimbabwe dollars stashed at home and in offices, the government announced last month it would withdraw the highest current denomination of banknotes within 60 days.
It said it would replace the $500 note with a new note of equal value, and also introduce a $1 000 note.
Three weeks later, government pleas to return large amounts of cash to the banks have not met with much success.
A week ago the it introduced local travellers cheques in another bid to ease the cash shortage, but these are facing resistance from shops and traders.
The unprecedented domestic cash shortage has also been attributed to soaring inflation, which stood last month at 365%. - Sapa-AFP
- SAPA