Reserve Bank to devalue currency by 90 percent

Reserve Bank to devalue currency by 90 percent

GONO

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• Zim claims on lowered inflation unconvincing

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• $200bln windfall for ex-political prisoners

• Zimbabwe's inflation seen dipping to 160%

By Staff Reporter

ZIMBABWE'S central bank will announce a steep currency devaluation this week to boost export earnings in a country suffering perennial foreign currency shortages, a newspaper said on Tuesday.

"Officials sources privy to the issue told The Daily Mirror that the central bank governor would be announcing a huge devaluation of about 90 percent in his monetary policy review at the end of this week," The Daily Mirror said.

"The Reserve Bank of Zimbabwe governor Gideon Gono has finally bowed to mounting pressure by industry to devalue the local dollar in a last-ditch attempt to boost export earnings," the newspaper said.

The Zimbabwean dollar is pegged at 6200 against the US dollar, yet on the black market last week it traded for over 13 000 to greenback.

Zimbabwe has for almost five years experienced an acute foreign exchange shortage when vital imports of fuel, electricity, basic foodstuffs and other commodities have to be paid for.

The government last year launched a scheme to encourage thousands of Zimbabweans living abroad to send money home.

The enthusiasm that greeted the launch of the scheme, codenamed the Homelink Scheme, has been waning in recent months.

Farmers and industrialists have been crying out for a devaluation, but the government has been reluctant.

Zimbabwe is mired in its worst-ever economic crisis, with a triple-digit inflation rate, unemployment levels over 70 percent and the critical lack of foreign currency.

International donors suspended aid more than four years ago while tourism and foreign investment have suffered a slump.

The tobacco sector — which earns a third of the country's desperately needed foreign exchange — has not had any significant impact on the foreign currency availability in the country - AFP
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