Zim issues new banknotes

2008-09-29 12:09

Harare - Zimbabwe's central bank introduced higher denomination banknotes on Monday in another sign of the hyperinflation that has shown no sign of abating despite this month's power-sharing deal.

The printing of 10 000 and 20 000 Zimbabwean dollar notes, worth $100 and $200 officially but 10 times less on the black market, came as government and opposition officials tried to break an impasse over cabinet posts.

The agreement signed earlier this month between President Robert Mugabe and opposition leader Morgan Tsvangirai has brought hope of political stability that could reverse the southern African country's deep economic slide.

Mugabe returns to Zimbabwe on Monday after attending the UN General Assembly meeting in New York last week.

Despite the hopes for an improvement after the power-sharing accord, Zimbabweans have yet to see much benefit.

"What the central bank is doing is in response to economic challenges, and the objective is clearly to help cushion the people," the state-run Herald newspaper said on Monday in an editorial about new currency and foreign exchange rules.

The new notes went into circulation only two months after the central bank redenominated the Zimbabwean dollar, which has plummeted in value in step with galloping inflation, now pegged at above 11 million percent.

The Confederation of Zimbabwe Industries (CZI), the country's main industrial body, has said many traders had lost confidence in the local currency and were charging in foreign currency for goods and services.

In addition to facing chronic shortages of food, foreign currency and fuel, Zimbabweans have been dealing with a shortage of local currency. Some consumers sleep outside banks to beat the long queues that form outside in the morning.

The central bank on Monday raised cash withdrawal limits to Z$20 000 from a previous Z$1 000, which was hardly enough to buy a loaf of bread on the thriving black market.

Analysts, however, have said the moves are unlikely to reverse the country's economic slide unless accompanied by a resolution of the impasse over the naming of a new cabinet.

Tsvangirai, who is set to become prime minister under the deal, called on Saturday for the formation of a power-sharing government "in the next few days" to help end the crisis.

Under the power-sharing deal, Mugabe retains the presidency and chairs cabinet, while Tsvangirai as prime minister chairs a council of ministers supervising cabinet.

Arthur Mutambara, who heads a small faction of Tsvangirai's Movement for Democratic Change (MDC) is also taking part in the negotiations and is set to be one of two deputy prime ministers.

The opposition will also get a combined cabinet majority, with Tsvangirai's MDC controlling 13 cabinet posts in the new government, Mugabe's Zanu-PF 15 and Mutambara's breakaway MDC faction three.

- Reuters