Zim­babwe rolls out ‘sur­ro­gate’ dol­lars amid hy­per­in­fla­tion fears

The Sun (Malaysia) - - SUNBIZ -

HARARE: Zim­babwe yes­ter­day be­gan is­su­ing “bond notes”, its own cur­rency equiv­a­lent to the US dol­lar in a bid to ease crit­i­cal cash short­ages amid wide­spread fears of a re­turn to hy­per­in­fla­tion.

The cri­sis-hit south­ern African coun­try has used mul­ti­ple for­eign cur­ren­cies, in­clud­ing the green­back since 2009 af­ter a rate of in­fla­tion that peaked at 500 bil­lion per­cent ren­dered the Zim­babwe dol­lar un­us­able.

The in­tro­duc­tion of US$2 and US$5 (RM8.80 and RM22) bond notes into cir­cu­la­tion fol­lows the is­su­ing of bond coins over a year ago to ease short­ages of change in smaller de­nom­i­na­tions.

The coun­try has ex­pe­ri­enced a se­vere short­age of US dol­lar ban­knotes in re­cent months which forced Pres­i­dent Robert Mu­gabe’s govern­ment to print what lo­cals have dubbed “sur­ro­gate money”.

“Cit­i­zens are gen­er­ally op­posed to the in­tro­duc­tion of bond notes be­cause they are still smart­ing from the death of the Zim­babwe dol­lar, which was aban­doned in 2009 due to hy­per­in­fla­tion,” said an edi­to­rial in the weekly in­de­pen­dent news­pa­per The Stan­dard.

“The govern­ment has been ar­ro­gant, dis­miss­ing those op­posed to the sur­ro­gate money as un­pa­tri­otic. As we have warned the govern­ment be­fore, a cur­rency can only be sus­tained through con­fi­dence it in­spires on the mar­ket.”

The cen­tral bank has launched a me­dia ad­ver­tis­ing blitz try­ing to al­lay peo­ple’s fears, say­ing re­tail­ers and busi­nesses have agreed to ac­cept the bond notes.

The in­tro­duc­tion of bond notes stoked fears of gas short­ages over the past week and queues sur­faced at some fuel sta­tions.

The govern­ment sought to calm pan­ick­ing driv­ers, say­ing the coun­try has enough fuel stocks.

“We wish to as­sure the na­tion that there is no ba­sis for al­leg­ing that the coun­try will go dry in terms of fuel sup­ply,” it said in a state­ment at the week­end. De­pos­i­tors will be limited to a max­i­mum with­drawal of US$150 a week.

The 2009 switch to for­eign cur­ren­cies saw rel­a­tive eco­nomic sta­bil­ity be­fore the econ­omy be­gan to falter again as govern­ment poli­cies de­terred in­vestors.

The eco­nomic de­cline has wors­ened in re­cent months with banks run­ning short of cash, forc­ing des­per­ate de­pos­i­tors to sleep overnight out­side branches to be sure of ac­cess­ing their money.

Those busi­nesses that have weath­ered Zim­babwe’s suc­ces­sive eco­nomic storms are grind­ing to a halt as the govern­ment re­peat­edly fails to pay sol­diers and civil ser­vants on time.

The in­tro­duc­tion of bond notes has also stirred anger that has erupted into street protests.

In the past fort­night sev­eral ac­tivists were beaten up and ar­rested ahead of a planned street protest to op­pose the in­tro­duc­tion of the notes.

The govern­ment said the new notes will be backed by a US$200 mil­lion sup­port fa­cil­ity pro­vided by the Cairo-based Afrex­im­bank. – AFP

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