Reserve Bank of Zimbabwe governor Gideon Gono announced the step in a televised monetary policy review blacked out by power outages and disruptions in transmission in downtown Harare.
Gono said the change to new currency denominations would take effect on August 1, 2008 and Zimbabweans had to phase out old banknotes by the end of December.
“With effect from the 1st of August 2008, the Reserve Bank is issuing new currency, not bearer notes which others have been counterfeiting, and the new currency signifies a return of the small pocket,” Gono said. “With effect from the 1st of August 2008, all monetary valuations have been redenominated by a factor of one to 10 billion, effectively meaning that we are removing 10 zeros from our monetary values.
“What this means is that Z$10 billion today will as from 1 August 2008 be revalued to Z$1.”
Gono said the huge monetary denominations had been scrapped to help computer systems cope.
Gono announced that he was introducing into circulation a Z$500 note, an equivalent of Z$5 trillion in the currency being phased out. He also introduced a Z$100 note, a $20 note, a Z$10 dollar note and coin, a Z$5 dollar note and coin, a Z$2 coin as well as a Z$1 dollar note.
He announced that he was returning into circulation the 50 cent, 20 cent and 10 cent coins.
“In other words we are saying go back and look for those coins because we never demonetized them in the first place,” Gono said.
He reviewed the cash withdrawal limit from banks.
“We are also relaxing the cash limit to a massive Z$200 in new money per day,” Gono said, “So the only limitations are really going to be one’s deposit in the bank.”
Economists said Gono was tinkering with the symptoms and not addressing the root cause of hyperinflation and the unprecedented economic meltdown.
Bulawayo-based economic commentator Eric Bloch, who also sits on the RBZ advisory body, said: “Knocking off of the 10 zeroes will have no effect on economic reconstruction although I want to believe most of the other measures are a fair attempt at restoring viability of some sectors.”
Economists said the step did not amount to a revaluation but was aimed at making it easier for consumers to handle increasingly worthless wads of banknotes as inflation skyrockets.
Last week the RBZ introduced a Z$100 billion note which could only buy half a loaf of bread.
Since January, the RBZ has introduced a Z$100 million bearer cheque, Z$250m and Z$500m banknotes and then followed those with Z$5 billion, Z$25bn and Z$50bn special agro-cheques, which have become major instruments of trade.
Zimbabwe’s sliding dollar has been officially devalued several times over the past few years but is still selling at more than four times the official rate of US$1=$Z30 billion on an illegal and thriving parallel market – where US$1 is trading at $Z120bn.
The southern African country’s economy – once the breadbasket of the region – has shrunk by more than a third during the past eight years of economic recession, blamed mainly on President Mugabe’s insane economic policies.
Post published in: News