Reserve Bank promises currency reforms

Reserve Bank promises currency reforms

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By Nelson Banya

ZIMBABWE'S central bank on Thursday said it would soon implement reforms to ease the effects of hyperinflation as consumers, retailers and banks struggle to make even simple transactions with a virtually worthless currency.

Once the beacon of southern Africa, Zimbabwe now has the world's highest inflation rate -- officially above two million percent but widely seen much higher.

Critics blame this and other economic woes -- including chronic shortages of food and other basic commodities -- on mismanagement by President Robert Mugabe's government.

The country's largest bank note, a 100 billion Zimbabwe dollar bill introduced on Monday, cannot buy a loaf of bread and retailers and banks have said it has become difficult to deal with an ever-increasing string of zeros on the currency.

"The Reserve Bank of Zimbabwe wishes to advise ... that appropriate measures are being put in place to address the current setbacks being faced on the currency front, as well as on financial and accounting systems," said central bank Governor Gideon Gono.

"Accordingly, therefore, the next few days will see the Reserve Bank unveiling measures that would address concerns on the current minimum cash withdrawal limits, as well as with the IT systems digit handling constraints."

Zimbabwe lopped off three zeros from its currency in August 2006, and financial accounts and prices were adjusted according, but hyperinflation has since forced the central bank to keep issuing higher-denomination notes, piling back the zeros.

At the beginning of the year, the largest bank note was worth Z$10 million, but it has now lost its value and is commonly found strewn on the capital Harare's streets, rejected by both street vendors and beggars alike.

On Thursday, one U.S. dollar fetched 45 billion Zimbabwe dollars on the official market, but was worth as much as 100 billion Zimbabwe dollars on a thriving black market fuelled by acute foreign currency shortages.

On Wednesday, Zimbabwe's trade union federation ZCTU wrote a letter to Gono, asking him to relax limits on cash withdrawals from bank accounts.

The ZCTU said the existing maximum cash withdrawal limit of 100 billion Zimbabwe dollars was not enough for urban workers whose daily public transport costs alone amount to about 150 billion Zimbabwe dollars. - Reuters
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