Zimbabwe unveils new monetary measures to curb hyper-inflation currency, a 100 billion dollar note

Editor's Note:

NATO countries have imposed sanctions on Zimbabwe after the government took back agricultural lands from European settlers. Series of economic and political problems followed.

www.chinaview.cn 2008-07-31 19:13:53

HARARE, July 31 (Xinhua) --

The Zimbabwe central bank has unveiled a set of new monetary measures to curb the country's hyper-inflated currency and answer calls to relax limits on cash withdrawals from bank accounting.

According to Zimbabwe state media the Herald, the measures which announced by central bank governor Gideon Gono on Wednesday mainly include the introduction of a new currency, raise of daily cash withdrawal limits and the introduction of old coins in circulation.

Representing his 2008 mid-term monetary policy statement in Harare, the central bank governor slashed off 10 zeros from the country's currency, thus turning 10 billion dollars into one dollar. At the same time, the governor announced the introduction of a 500 dollar note.

While introducing a new 25 cent coin, Gono also announced the introduction of old coins which he hoped will increase the amount of money in circulation. The old coins include 5 dollars, 2dollars, 1 dollar, and 50 cent, 20 cent and 10 cent coins.

Further, the central bank chief raised the daily cash withdrawal limits by 1,900 percent to 2 trillion dollars or 200 dollars in the new currency.

The new and old currency will co-circulate with the existing bearer checks and special agro checks, which will expire on December 31.

The monetary measures will come into effect on Friday, the Herald reported.

Speaking on the representation of the new monetary measures, Gono said "Go back and look for those coins, we never demonetized them."

"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," Gono said.

"The current reform efforts will, therefore, work to sustain permanency of the new currency being rolled out, along with the conveniences it will bring," the Herald quoted the central bank chief as saying.

The hyper-inflation rate in the country was estimated at 2.2 million percent year-on-year last month.

To fend off the threat of a wholesale loss of confidence among depositors and investors, it has become necessary to increase withdrawal limits and lop off additional zeros, the Herald commented.

The proliferation of zeros have made calculations difficult as the banking system could not read numbers excess of 10 billion.

Between May and September 2003, Zimbabwe experienced critical cash shortage that witnessed queueing for hours to withdraw their savings.

Zimbabwe introduced its largest bank note of 100 billion dollar bill mid in July this year, which is still not enough to buy a loaf of bread.Banks and retailers have been complaining to the government that it has become difficult to deal with an ever-increasing string of zeroes on the country currency.

In August 2006, the Zimbabwe central bank cut three zeros from the old currency and at the same time issued a new family of bearer checks.

The call to raise the daily cash withdrawal limits has been in the air for a long time with the Zimbabwe trade union federation ZCTU as the latest. It sent an appeal letter to the country's central bank earlier this month, urging it to relax daily cash withdrawal limits.

The new monetary measures are adopted to fight the inflation over the years and set the economic development at the right track.

Soon After the central bank chief announced the introduction of the new monetary measures, Zimbabwe President Robert Mugabe warned the country's business sector that he will impose emergency rules if they profiteer.

In a televised address, Mugabe said "If you drive us more than you have done, we will impose emergency measures, and we do not want to place our country in a situation of emergency rules."

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