Zimbabwe

Zimbabwe to print local 'US dollar'

2016-05-05 19:00
FILE: New Zimbabwean dollar bills unveiled by the Zimbabwe central bank, in Zimbabwe on February 2, 2009. (Desmond Kwande, AFP File)

FILE: New Zimbabwean dollar bills unveiled by the Zimbabwe central bank, in Zimbabwe on February 2, 2009. (Desmond Kwande, AFP File)

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

Special Report

World Bank responds to Zim activist Dzamara's petition
World Bank responds to Zim activist Dzamara's petition

The World Bank country director for Zimbabwe, Guang Zhe Chen, has responded to a recent petition by Zimbabwean activist Patson Dzamara, calling on the financial institution not to resume support for the southern African country.

Harare - Zimbabweans formed long queues outside banks on Thursday as a cash shortage prompted the government to announce plans to print a local version of the US dollar and limit withdrawals.

The government adopted US and South African currencies in 2009 after hyperinflation - which peaked at 231 million percent - rendered the national currency unusable as the country's economy collapsed.

A recent shortage of foreign notes led Reserve Bank Governor John Mangudya to unveil a raft of radical measures on Wednesday, including limiting withdrawals to $1 000 or R20 000 per day.

Mangudya said that the central bank would also print its own dollar-equivalent bond notes - "which are currently at the design stage" - to ease the cash crunch.

Mangudya denied the new banknotes were a step towards re-introducing the tarnished Zimbabwe dollar, but the plan was still criticised by some experts.

"This is extremely damaging to the interests of everyone and very dangerous to the economy," independent economist John Robertson told AFP in Harare.

"It won't be long before this becomes another inflation story. People will refuse to be paid their wages in bond notes.

"Shops will not accept them as they cannot be used to restock [from abroad]. I am hoping that the government can be talked out of it."

Bond coins were introduced in Zimbabwe in 2014 to tackle the problem of small change.

The new notes in denominations of $2, $5, $10 and $20 will play a similar role, acting as tokens.

Zim dollar to return?

They will be backed by a $200-million support facility provided by Afreximbank (Africa Export-Import Bank), the government said.

"This does not signal the reintroduction of the Zimbabwe currency," Mangudya said.

"The fundamentals are not yet right for its comeback. This is just a measure to curb illicit flows out of the country."

Economists blame the cash shortage on a trade deficit which saw the country's import bills standing at $490 million in the first quarter against $167 million in exports.

Apart from limits on withdrawals, the amount of cash that can be taken out of the country per trip has been cut from $5 000 to $1 000.

In the queues outside the banks, tempers were running high.

"I am supposed to be at work but here I am queueing since yesterday," said Monique Fore, 39, a bursar at a school in Harare.

"It's becoming embarrassing explaining to my landlord that I can't withdraw money to pay rent."

In some cases, banks have limited the amount that can be taken out to $200 - well below the maximum set by the government.

$100 trillion denomination

Shadreck Mafukeni, a 57-year-old carpenter working for a furniture manufacturer, said his salary had been deposited in the bank on Tuesday but he had been unable to withdraw any money.

"I need to pay rent, my children's school fees and I also need to repay debts to several people I owe money.

"I have used the little money I had at home on the bus fare. If I don't get money today, I will walk back home."

Zimbabwe once removed 12 zeros from its battered currency at the height of hyper-inflation in 2009 when the largest note was the $100 trillion denomination.

State-sanctioned seizure of white-owned farms starting in 2000 left the agricultural sector in ruin, and triggered a sharp economic slowdown, with mass unemployment, emigration and many business closures.

President Robert Mugabe, 90, has ruled the country, which relies on imports for even basic commodities, since independence in 1980.

Read more on:    zimbabwe  |  southern africa

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

SHARE:

Inside News24

 
/News

Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.