Inflation forces Zimbabwe to print new notes

Inflation-hit Zimbabwe has had to introduce a new bank note ten times greater than its previous largest denomination in an effort to end chronic cash shortages.

The $10m Zimbabwe dollar notes will be issued tomorrow along with $1m and $5m dollar ones. The highest existing note, introduced last month, is for 750,000 Zimbabwe dollars.

The new $10m note is the equivalent of about €2.68 at the dominant black market exchange rate. A hamburger at an ordinary café costs about $15m Zimbabwe dollars or €4.

That hamburger has trebled in price this month amid shortages of bread, meat and most basic goods.

Zimbabwe faces the world’s highest official inflation of an estimated 25,000%. Independent financial institutions say real inflation is closer to 150,000%.

Acknowledging the inflation crisis, Reserve Bank Governor Gideon Gono said individuals from tomorrow would be allowed to withdraw an increased limit of $500m Zimbabwe (€134) in a single daily withdrawal, up from $50m (€13.40).

He said special arrangements were being made to pay soldiers, police and other uniformed services “because it is not desirable to see them queueing for cash.”

Mr Gono said with higher denomination bills businesses might be tempted to again raise prices of scarce goods.

“If this happens the whole objective of solving the cash shortages and to bring convenience to the people will be defeated,” he said.

In August 2006, the central bank slashed three zeros from the nation’s old currency.