ZIMBABWE FACES BREAD SHORTAGE

… And launches new currency measure

HARARE - Zimbabwe is on the brink of running out of bread in the coming weeks as flour stocks diminish, according to media reports.

This is largely due to the government’s failure to pay for imported wheat, REUTERS reported.

Earlier this month, the bread price increased by a whopping 66 percent, while the government tried to lessen the blow on basic commodities by introducing  price controls and subsidising healthcare and public transport.

This increase, however, did not have anything to do with the price of wheat from suppliers. In December 2018 and January 2019, the bread price increased at least thrice.

Earlier this week, the Grain Millers Association of Zimbabwe’s general manager Lynette Veremu wrote a letter to the National Bakers Association of Zimbabwe instructing it not to pay for 55, 000 tonnes of wheat in warehouses in Mozambique and Harare, according to  NewsDay.

The letter read: “We regret to advise that the current stocks for foreign wheat for bread flour have depleted to 5 800 tonnes and … we are left with less than eight days of national bread flour supplies.”

The letter was dated February 18. Zimbabwe is also in the middle of a severe shortage of US dollars, which has dwindled fuel and medical supplies, as President Emmerson Mnangagwa struggles to uplift the economy. This was his pre-election promise to the country, ZwNews reported.

Meanwhile, Zimbabwe, without its own currency for a decade, took steps to address its worsening economic crisis by allowing its surrogate currency, bond notes, and electronic funds to float freely against other major currencies, abandoning an official but artificial parity with the dollar.

Zimbabwe has not had a local currency since 2009 when it abandoned the Zimbabwe dollar due to hyperinflation that reached 500 billion percent, according to the International Monetary Fund. To curb the ruinous inflation, Zimbabwe adopted a multi-currency system dominated by the US dollar. However, a shortage of cash dollars pushed the government in 2016 to issue a surrogate currency called bond notes, to trade alongside electronic money, which are funds electronically deposited into bank accounts. The current crisis has resulted in increased inflation and shortages of fuel and food.

On Wednesday, the government announced measures to address the currency crisis. Reserve Bank of Zimbabwe governor John Mangudya abandoned the parity and announced that banks can now offer market-determined rates to buy cash dollars with the bond notes or through electronic transfers.

Bond notes and electronic funds will be known as a separate currency called Real Time Gross Transfer dollars, or RTGS dollars, said Mangudya in a much- anticipated monetary statement.