Zimbabwe forced to issue more money

Hyper-inflation hit Zimbabwe was preparing today to reprint its currency again to remove ridiculously high denomination notes.

It will be the second time in a year that the crippled economy has removed three zeros from the end of its money.

After the change, described as “imminent”, the highest existing bill for 200,000 Zimbabwe dollars becomes 200. A new 500 Zimbabwe dollar note has also been introduced.

Central Bank Governor Gideon Gono said: “I know the zeros we removed last time came back quickly but this time we are doing it in such a way they will not return,” but did not elaborate.

Zimbabwe has suffered chronic shortages of local cash this month that created long lines at banks and cash machines not shut down by the daily power outages.

Mr Gono accused speculators of hoarding cash, saying the new denominations would replace the old in a changeover lasting a day or two.

He said holders of cash needed to urgently deposit it into the formal banking system “before it turns to useless manure.” Banks and finance houses were asked to extend their business hours to accommodate depositors.

The state Central Statistical Office said yesterday its monthly announcement of official inflation scheduled for early November still was not ready, but an independent business weekly newspaper said leaked figures showed official inflation at 14,800%, up from 8,000% in early October that was then by far the highest in the world.

A government order in June to reduce inflation by slashing prices of all goods and services by half left shelves bare of the corn meal staple, bread, meat, cooking oil, sugar and other basic goods. It also worsened acute petrol shortages.

This month prices of available goods generally exceeded prices before the June 26 directive after a series of price increases were permitted to restore the viability of supplies from producers and manufacturers.

Independent estimates put inflation at close to 40,000% this month, and the International Monetary Fund has forecast it reaching 100,000% by the end of the year.

Store executives said supplies of food and small luxuries such as Christmas chocolate, paper crackers and cheap toys normally stocked in November have not resumed despite Central Bank loans to producers at 25% interest, compared with general interest rates of around 600%.

The state daily newspaper, The Herald, one of the cheapest items on the market, doubled its cover price to 300,000 Zimbabwe dollars this week.

The last changeover to new currency triggered a buying spree of luxuries as Zimbabweans got rid of spare money before it became obsolete.

This time around, there are few luxuries to buy.