Mugabe by-passes parliament to ban money 'hoarding'

President Robert Mugabe has by-passed Zimbabwe’s parliament to ban money “hoarding” to relieve the country’s cash crisis, the state-run newspaper reported today.

Finance Minister Herbert Murerwa said Mugabe signed in the new law this week without presenting it to parliament, because of its urgency, the Herald reported.

Murerwa said any person hoarding cash would be penalised, but he could not clarify what the new limits were or what penalties could be incurred.

Bank economist Anthony Hawkins and economic consultant John Robertson said bankers had not been warned of the move and were “mystified” about how it would be applied.

The country is suffering its worst economic crisis since independence in 1980, with official inflation at 370%. Black market trading in scarce food and petrol put inflation closer to 700%.

Local currency shortages are blamed on the out-of-control inflation, the central bank’s inability to print money quickly enough and the hoarding of cash amid uncertainty in the crumbling economy.

Hawkins feared the announcement would open the way for arbitrary seizures of cash by police as has happened with people found in possession of dwindling necessities like bread, maize meal or fuel.

“It is just panic, it is a farce,” Hawkins said.

Earlier this week, the government made the unprecedented move of unveiling a range of new travellers’ cheques in huge denominations, saying it would ease acute shortages of local currency.

The Reserve Bank said the checks in denominations of up 100,000 Zimbabwe dollars, would be legal tender accepted by major stores and businesses in Zimbabwe.

The Reserve Bank announced last month it planned to issue a 1,000 Zimbabwe dollar bank note by October. In another attempt to keep the sinking economy afloat, it also plans to replace the 500 Zimbabwe dollars bill with a new design within two months to force hoarders to turn in old bills.

The 500 Zimbabwe dollar bill has been scarce for several weeks, prompting long lines outside banks. Banks have rationed withdrawals to 5,000 Zimbabwe dollars - 40p at the official exchange rate.

Part of the deepening economic crisis is blamed on the state program that seized thousands of commercial farms from the white minority for redistribution to black settlers.

Foreign investment and aid have largely ended in protest of human rights abuses and the disputed presidential elections last year that gave Mugabe another six-year term in office.