Zimbabwe cash crisis

ZIMBABWE’S central bank unveiled a new bank note yesterday, double the value of the inflation-wracked nation’s largest note at 100,000 Zimbabwe dollars – worth around €0.75.

The new note goes into circulation tomorrow, the Reserve Bank said.

With official inflation running at 1,043%, the highest in the world, the note is slightly more than enough to buy a price-controlled loaf of bread or a copy of the state newspaper.

The central bank said higher denominations may be introduced later.

A Z$50,000 Zimbabwe note was introduced four months ago. Coinage has long disappeared.

The troubled southern African nation is facing its worst economic crisis since independence from Britain in 1980.

The official poverty line for the basic monthly needs of an average family of five rose to an income of Z41 million (€315) earlier this month, making even impoverished Zimbabweans multimillionaires in local currency terms.

An estimated 80% of the 12.5 million people live far below the poverty line.

Economic meltdown has been blamed on disruptions to the agriculture-based economy since the often violent seizures of thousands of white-owned commercial farms began in 2000 to transfer land to blacks.

Shortages of food, hard currency and gasoline, along with regular power and water outages, have crippled production in the former regional breadbasket.

On Monday the price of petrol rose by one third, the equivalent of about €10 a gallon, at the official exchange rate.

Business at the Harare Stock Exchange, shut down last week, remained suspended yesterday in a dispute with tax authorities, leading to massive losses on stock trading.

The Zimbabwe Revenue Authority said brokers boycotted the exchange after being ordered to pay value added tax on commissions.

It said brokers could appeal to the Fiscal Appeals Court but should resume trading and pay about 15% tax in the meantime.

Brokers argue the nation’s tax legislation exempts them from VAT, and say paying the levy would force many out of business.