Published by the government of Zimbabwe
Jeffrey Gogo, Martin Kadzere and Zvamaida Murwi
31 July 2008
Harare — RESERVE Bank of Zimbabwe Governor Dr Gideon Gono yesterday announced the introduction of a new currency, and raised daily cash withdrawal limits by 1 900 percent, as part of measures to bring convenience to the transacting public.
The measures are effective tomorrow.
Dr Gono lopped off 10 zeros from the currency, meaning $10 billion is now equivalent to $1, and announced the reintroduction of old coins, which will increase the amount of money in circulation.
Presenting his 2008 mid-term monetary policy statement in Harare yesterday, the central bank chief raised the daily cash limit to $2 trillion or $200 (in the new currency) from $100 billion previously.
The new and old currency will co-circulate with the existing bearer cheques and special agro cheques, which expire on December 31.
RBZ introduced a new 25 cent coin and reintroduced $5, $2, $1, 50 cent, 20 cent and 10 cent coins.
"Go back and look for those coins, we never demonetised them," said Dr Gono, who also announced the introduction of a $500 note, which would be the highest denomination.
However, with a maximum cash payout of $200 (new currency) from banks, it is not clear whether the $500 will be released into circulation tomorrow.
"We once again wish to call upon stakeholders to exercise restraint in their demand for cash and in how prices are set in the goods and services markets," said the governor.
"The current reform efforts will, therefore, work to sustain permanency of the new currency being rolled out, along with the conveniences it will bring."
To fend off the threat of a wholesale loss of confidence among depositors and investors, it had become necessary to increase withdrawal limits and lop off additional zeros.
The proliferation of zeros had made calculations difficult as the banking system could not read numbers in excess of 10 billion.
Between May and September 2003, the country experienced critical cash shortages that saw customers queueing for hours to withdraw their savings.
In August 2006, Dr Gono slashed three zeros from the old currency and issued a new family of bearer cheques.
Yesterday, Dr Gono reinforced the need to continue funding agriculture, as the cornerstone for economic development.
He said the fourth phase of the Agricultural Mechanisation Programme would be launched soon, so that by 2010 between 70 percent and 80 percent of farmers would be fully mechanised.
There was also no need for political bickering, the governor said, as this destabilised efforts towards economic recovery. Dr Gono spoke on the need for political unity and speaking against sanctions with one voice.
Dr Gono said the central bank would continue assisting fertilizer companies with the aim of increasing production.
On Monday, the central bank advanced US$3 million to fertilizer manufacturers. An additional US$3 million would be allocated to the industry next week.
"This will enable them to put their industry to full production and enable them to meet the fertilizer requirements that we need," he said.
The central bank promised to release at least US$10 million to the industry on a monthly basis to ensure adequate supplies. Fertilizer firms need as much capital every month to operate at full throttle.
Some 1 250 tonnes of fertilizer are expected every week from the US$10 million advanced to fertilizer producers early this month. The shortage of inputs, including fertilizers, has been blamed for low agriculture production over the years.
Dr Gono kept interest rates unchanged at 8 500 percent and 9 500 percent for secured and unsecured borrowing respectively, a key tool he has used to fight inflation over the years.
But inflation has not come down. It has instead risen to a record 2,2 million percent at the end of June. Dr Gono said the only answer to curbing inflation was increased production, especially in agriculture.
It is thus his hope that agriculture funding will be prioritised going into the future. Dr Gono proposed "a moratorium on all incomes and prices for a minimum period of six months" to curb inflation growth.
President Mugabe has invoked presidential temporary powers meant to give effect to the currency reform measures announced by the RBZ yesterday.
The regulations, which were published in a statutory instrument in an Extraordinary Government Gazette yesterday, give effect to the currency reforms which would see the money being revalued and lopping off 10 zeroes that had become cumbersome in cash transactions.
The regulations are set to take effect from tomorrow when new notes and coins come into circulation.
The regulations also spell out the common features found on the new currency.
It is also stipulated in the regulations that for all accounting, taxation and other purposes requiring financial results for a period of 12 months, the final balances would be expressed in terms of the new currency.
"No financial institution shall impose any fee, commission or other charge whatsoever in respect of the conversion from the old currency system to the new in terms of Subsection (9) or (10)," read the regulations.
A financial institution caught contravening the section would be liable to a fine of up to or exceeding Level 14, the highest level available.
Traders are required by the regulations to adjust, reconfigure or redesign where necessary, replacement of its computer software, hardware or networks.
An institution that fails to comply with the above regulations would be liable to a fine equivalent to or exceeding Level 14.
Traders or shops are also required to display their prices in both the old and new currency.
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Appeal for increased agricultural productivity, an idea coming from Gono - the very person who invented the 10 billion Dollar note?
Either he is blindly following marching orders from his master or his place ought to have been in a psychiatric institution!! He suddenly discoverd that a billion figure does not fit into calculators only a week after introducing the note!! Then he made a U-turn. I tend to believe Gono thinks he is in a circus!!
One million Zimbabweans have sought refuge in neighbouring countries and a majority of them are waged farm workers, formerly employed in the very… [Read Full Text]
katz if you have time visit this website "http://www.govtrack.us/congress/billtext.xpd?bill=s107-494" read sec 6 (3) and tell me how you can impose economic sanctions on an individual?
easy... why are you so dumb today? you freeze their assets and stop thier travel. This is like kindergarten!
awt...ha ha ha..that made me laugh out loud. At least we can now understand why it is impossible for basic facts to sink into the dense brains on here...ha ha ha.
I hear ya. So people are just too far gone
katz...spot on!!! Are they honestly going to lower the price of a loaf of bread to 5cents??? If that is the case I will fly to zims and do my monthly groceries there whilst catching a bit of sun!! ha ha ha
Yes, Katz if you do understand how the West responded to land redistribution you are thinking alright. Only if you can't link all the hammering to include declared sanctions and all. The truth of the matter is the West think Mugabe's regime is setting a precedence where the white supremacy will be undermined. Only if you are too blind to notice that Zimbabwe's attention isn't worth the devoted media scrutiny it is getting then you could go all the way to suggest it was all Mugabe's regime's fault. Sometimes as a people you forego short term gains for the grand… [Read Full Text]
See all comments (27).
"But inflation has not come down. It has instead risen to a record 2,2 million percent at the end of June. Dr Gono said the only answer to curbing inflation was increased production, especially in agriculture." - it follows therefore that the collapse of production (especially in agriculture) in the first place was the root cause of the hyperinflation that Zimbabwe is currently suffering from.
Are there any Selectors, Akapfundes or Djosers out there who can explain to me how the West can be blamed for the collapse of Zimbabwe's agricultural productivity? I mean apart from the usual platitudes about… [Read Full Text]