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Zimbabwe: RBZ Working On $500 Billion Note
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Zimbabwe Independent (Harare)
25 July 2008
Posted to the web 25 July 2008
Paul Nyakazeya
CASH shortages worsened further this week amid speculation that the Reserve Bank of Zimbabwe was working on plans to introduce yet another higher denomination agro-bearers' cheque.
Businessdigest understands that the RBZ is finalising the introduction of a $500 billion note which is equal to less than US$4, barely a week after introducing a new $100 billion note.
The $100 billion note joined a family of bearer notes with the imprint "Special Agro Cheque" in the $5 billion, $25 billion and $50 billion denominations.
But with the highest denomination note hardly enough to afford -- for Zimbabwe's shrinking working class -- a trip to and from work using public transport, most Zimbabweans see nothing special about the so-called agro-cheques. The RBZ has however ordered banks to give special dispensation to uniformed forces to withdraw $1 trillion daily.
The $500 billion bearer cheque is likely to be introduced next week or early August.
It comes at a time when the RBZ continues to limit cash withdrawals for individuals and corporates.
Corporates and individuals are allowed to withdraw only $100 billion daily, which is barely enough to buy a single candle in a country where frequent power cuts are the norm.
Liquidity shortages on the market have resulted in parallel market stabilising for nearly two weeks.
The United States dollar, which was going for $19 000 on January 2 this year was trading between $110 billion and $130 billion over the past two weeks.
The transfer rate had been furiously on the run, trading above $750 billion to the greenback as cash shortages persist.
The $500 billion bearer cheque, enough only to buy two loaves at today's price -- if available -- would be the 30th new note the Reserve Bank governor Gideon Gono has introduced since he was appointed in November 2003.
This year alone government issued bills in denominations of $1 million, $5 million, and $10 million in January. In May, it issued bills from $25 million and $50 million up to $25 billion and $50 billion.
"I would say the new bearer's notes will come next month (August)," said a central bank official who is part of the team working on the introduction of the new denominations.
"The introduction of higher denominations of bearers' cheques is an interim measure by the governor to ensure that cash shortages which the country experienced between November last year and February this year do not recur," central bank officials said this week.
It was also meant to avoid customers carrying large volumes of money to buy few goods because of hyperinflation.
The Reserve Bank had not responded to questions sent at the time of going to print.
Gono recently said the bank had put in place "pro-active and appropriate" strategies to counter these developments. He gave assurances to the banking and transacting public that the Reserve Bank was on top of the situation.
Acting Reserve Bank governor Charles Chikaura, introduced the first bearer cheque as a temporary measure in July 2003. Since then Zimbabwe has not had a formal currency.
The value in both real terms and convenience of bearers' cheques introduced during the five-and-half years have been overtaken by events on the inflation front.
Inflation surged to 2,2% million from 399,5% in July when the first bearer cheques was introduced. Independent economists however argue that inflation is above 10 million percent.
As inflation continues to gallop the demand for cash has also increased. The parallel market has also put pressure on the defenceless Zimbabwe dollar.
"The Reserve Bank is fighting a losing battle," independent economist John Robertson said. "As long as inflation remains high, cash shortages will persist. There is need to address inflation by increasing production so that a few goods do not (cost) a lot of money," he said.
Zimbabweans have battled severe cash shortages over the past four years due to an economic crisis described by the World Bank as unprecedented for a country not at war.
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In addition to cash shortages, Zimbabweans are also grappling with shortages of virtually every basic survival commodity, essential medicines, fuel and foreign currency.
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What an absolute shambles...an embarrassment to all africans..even zambia in its grip of economic gloom never plumbed depths this low. all thanks of course to mugabe's sterling stewardship of the economy along with his kleptomaniacal cabinet of obese ministers!!! well done boys..you done us proud!!! bet you wake up in the middle of the night sometimes and dream of the Rhodesia dollar and all it cold buy you!!!
the time has come to peg the zimdollar to the us dollar at a realistic rate, gather all those useless zimdollars and have a large bonfire and plead with the yanks to let zimbos use their US dollars as legal tender.
eh.eh? Gideon is doing the best that he can.He is in governMUNT. My only advice(and i feel i can, because i also work with muney,operating a stall, selling bananas) Is...Karefull Kaffall! But ona positive NOTE, keep up the good work
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