The three new banknotes, a Z$1 million (US$0,30), $5 million and $10 million bank notes, will go into circulation on Friday and will hold tender until July, Reserve Bank governor Gideon Gono told a press briefing yesterday.
Zimbabwe started introducing bearer cheques with a temporary validity five years ago to ease critical cash shortages.
The latest banknotes come hardly a month after the RBZ unveiled three other bearer cheques, a $250,000, a $500,000 and $750,000 bills.
With effect from Friday (January 18), the Reserve Bank of Zimbabwe is releasing the following bearer cheques into circulation: $1 million, $5 million and $10 million, Gono said. Further to provide relief and convenience to the transacting public, daily cash withdrawals have been increased from the current $50million to $500 million per individual. This takes effect from Friday, he said.
Zimbabwe is in the throes of an economic crisis with galloping inflation which peaked to 24,000 percent last month, soaring poverty levels, an 80 percent-plus unemployment rate and acute shortages of fuel and basic goods.
Gono had forecast that Zimbabwe’s inflation should end 2007 pegged at around 65 percent before declining further to single-digit levels in 2008 in line with the Southern African Development Community (SADC) target.
Zimbabwe, with well-developed human capacity and infrastructure, is a key member of the SADC economic bloc, whose target has been to have single-digit inflation by 2008.
But independent economists are warning that Zimbabwean inflation is fast approaching the 100,000 percent mark.
In economic terms, the velocity of the circulation of money will be increasing rapidly, economist Best Doroh said. Wages are likely to be rising as fast as inflation. Prices are being driven by ever higher input costs at point of manufacture.
However Gono said: As monetary authorities we once again assure the nation that we are in full control of the currency situation in the country and it is never our intention, nor is it part of our philosophy, to cause unnecessary pain to fellow Zimbabweans, he said. In this regard, the central bank will continue to formulate and implement tangible solutions to the challenges that the financial sector is currently facing for the benefit and convenience of the public.
He blamed the cash crisis on cash barons and indiscipline and said corruption was rife.
Speculation has become endemic in our country and this is now disrupting the free circulation of cash in the economy, he said, adding, There is growing evidence that part of what we see as cash queues at banks is partly an indication of inflated demand for cash as some depositors have developed a perpetual habit of withdrawing their entire savings even if they have no immediate need for cash.
At the country’s independence from British colonial rule in 1980, the Zimbabwean dollar was roughly at par with the pound sterling.
Zimbabweans then used cents, one dollar coins and bank notes in four denominations. But due to inflation, the Zimbabwe government introduced five new denominations from 2001 while coins were phased out as the value of the Zimbabwean dollar continued to depreciate against major currencies.
Post published in: News