New money plan backfires (01-03-07)

Reserve Bank Governor, Gideon Gono, has failed to introduce new money notes due to increasing inflation. Instead, sources say he has decided, after consultations with President Robert Mugabe, to print more money - a move reportedly endorsed by new finance minister Samuel Mumbengegwi.

urces privy to recent meetings report that Mumbengegwi met Mugabe and Gono to discuss the issue of new notes, whose highest denomination would be Z$1000, returning Zimbabweans to the era of carrying huge quantities of cash.
“Mumbengegwi is expected to do nothing much, but merely endorse such plans and he did just that,” a source said. “Mugabe and Gono agreed to print more bearer cheques after several weeks of debate and contemplation. The background of the matter is that Gono had hoped to introduce his new notes by end of January but faced stiff resistance from former minister of Finance, Herbert Murerwa when he was still in office. Inflation continued to rise making it difficult for him to justify introduction of his new currency.”
Efforts to obtain comment from Gono were in vain but Mumbengegwi confirmed having met with both Mugabe and the governor. “We met to discuss vital issues of the fiscus and monetary policies, that’s all I can say,” he said.
Gono confirmed having spent huge amounts of scarce foreign currency to produce new notes and was planning to ambush the market by introducing them without warning as a way of punishing speculators and dealers alleged to be hoarding huge tracts of the bearer cheques. – Itai Dzamara

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