Gono unveils new economic reforms

Gono unveils new economic reforms

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By Staff Reporter

ZIMBABWE'S central bank announced reforms Thursday aimed at easing acute shortages of hard currency, gasoline and essential imports that have crippled Zimbabwe's economy.

Gideon Gono, governor of the Reserve Bank of Zimbabwe, said commercial banks will be allowed to set a new "interbank market rate" that is expected to attract more foreign currency into the formal economy.

The official exchange rate will remain at 26,000 Zimbabwe dollars to the U.S. dollar, but exporters, individuals with hard currency and at least 3.4 million Zimbabweans living abroad will qualify for a new as yet unspecified rate.

Exporters will be able to exchange 70 percent of their foreign earnings at the new rate. The balance must be turned over to the bank at the official rate and will be used for strategic state needs, Gono said.

He stopped short of announcing an across-the-board devaluation but said the bank's exchange rate would be guided by market trends.

Independent economist John Robertson said Gono's announcement would likely give exporters now on the verge of closure hope of survival amid the worst economic crisis since independence from Britain in 1980.

"It is unclear at this stage how the new rate will be set, but it looks as though there will at last be a market component in the exchange rate," he said.

Foreign currency shortages have led to a thriving black market that saw the U.S. dollar trading for 90,000 Zimbabwe dollars this month.

Harare business executive Herbert Nkala described the change as an "exciting incentive" to draw hard currency away from the unofficial market, reduce inflation and curb black market trading in cash, gasoline and commodities.

Zimbabwe's economy has spiraled out of control since the government began seizing thousands of white owned farms for redistribution to blacks in 2000. Years of drought have compounded the decline.

Inflation soared from 124 percent in March to 360 percent in September. Long lines for the corn meal staple, sugar and bread are common, and gas stations have run dry.

In a bid to ease fuel shortages, Gono has allowed selected stations to import gas and sell it for hard currency or vouchers obtained through the Reserve Bank.

Gono, in a quarterly fiscal statement Thursday, said the economic decline this year was compounded by the need to import food after the failure of the last harvest.

"We commit ourselves to not importing food next year," Gono said.

Robertson, however, said continuing food imports were inevitable. Shortages of seed, fertilizer, mechanical equipment and diesel fuel have brought farming operations to a virtual standstill ahead of the upcoming planting season. Zimbabwe consumes about 1.8 million tons of grain a year - AP
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