Zim­babwe plans new cur­rency as dol­lar short­age bites

Gulf Times Business - - BUSINESS -

Zim­babwe will in­tro­duce a new cur­rency in the next 12 months, the coun­try’s Fi­nance Min­is­ter said, as a short­age of US dol­lars plunges the fi­nan­cial sys­tem into dis­ar­ray, forc­ing busi­nesses to close and threat­en­ing un­rest.

The south­ern African na­tion aban­doned its own hy­per­in­fla­tion-wrecked cur­rency in 2009 at the height of an eco­nomic re­ces­sion, adopt­ing the green­back and other cur­ren­cies in­clud­ing ster­ling and the South African rand.

But with­out enough hard cur­rency to back up the $10bn of elec­tronic funds trapped in lo­cal bank ac­counts, busi­nesses and civil ser­vants are de­mand­ing pay­ment in cash which can be de­posited and used to make pay­ments both in­side and out­side the coun­try.

Mthuli Ncube told a town­hall meet­ing late on Fri­day that a new lo­cal cur­rency would be in­tro­duced in less than twelve months.

“On the is­sue of rais­ing enough for­eign cur­rency to in­tro­duce the new cur­rency, we are on our way al­ready, give us months, not years,” he said.

Zim­babwe cur­rently has less than two weeks im­port cover, ac­cord­ing to cen­tral bank data, and the gov­ern­ment has pre­vi­ously said it would only con­sider launch­ing a new cur­rency if it had at least six months of re­serves.

Lo­cals are haunted by mem­o­ries of the Zim­bab­wean dol­lar, which be­came worth­less as hy­per­in­fla­tion spi­ralled to reach 500bn pre­cent in 2008, the high­est rate in the world for a coun­try not at war, wip­ing out pen­sions and sav­ings.

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