Zimbabwe introduces new notes, coins

By Staff reporter | 30 Oct 2019 at 11:46hrs
THERE is no respite for long-suffering Zimbabweans after the government once again hiked the prices of petrol and diesel yesterday the second such increase this month alone piling more pressure on skint consumers and businesses, the Daily News reports.

Experts said last night that the latest fuel price jump of nearly $2 a litre would lead to more increases in the already unaffordable prices of goods and services in the country, as Zimbabwe's economic rot continues to worsen.

This comes as authorities said yesterday that they would introduce new notes and coins in the next two weeks although critics were again quick to say this amounted to "mere tinkering around" while the lot of the average citizen was worsening by the day.

The new money will consist of $5 notes and $2 coins, with Reserve Bank of Zimbabwe governor John Mangudya emphasising that it would circulate alongside the existing bond notes and coins that were introduced in 2016.

"We are going to be releasing the notes into the market to ensure that we don't starve the market of cash.

"We also ... want to revise bank withdrawal limits upwards so that at the end of the day people do not pay premiums for their cash.

"Within the next two weeks they will be having the cash and the cash does not increase inflation," Mangudya said.

"We are going to have ... bond notes and coins in circulation... and $2 and $5 currency in circulation.

"They are going to be used inter-changeably at one to one. The new currency will not have anything called bond notes, it will just be called (Zim) dollars," he added.

The new notes will have green and purple colours, the same as the current colours of the $2 and $5 bond notes.

Mangudya also said a new law would be gazetted soon, followed by an advertising campaign for the notes, and later their injec- tion into the market.

The Zimbabwe dollar, which was re-introduced in June, has been plunging against major currencies ever since the government also simultaneously banned the general local use of the stability-inducing US dollar and other currencies.

Yesterday, former Finance minister in the short-lived government of national unity (GNU) Tendai Biti said the introduction of the new notes was surprising and would lead to the further collapse of the exchange rate.

"You can't be changing currency like diapers. This is a sign of failure. We can adopt the renminbi of China ... or the naira of Nigeria, but what are they trying to achieve?

"Currency is a by-product of confidence. No one trusts this regime. The day this new money will be introduced, the exchange rate will go rampant.

"What are they trying to address? In February 2019 they came up with the RTGS currency after I pointed out that they wanted to introduce a new currency.

"In June they introduced another cur- rency when they banned the multi-currency regime. It's a new game now. They had this currency 10 months ago, but didn't want to confirm what I had said.

"We need to go back to the multi-currency system. The new currency is for funding political patronage. It's good news for Fourth Street money changers," Biti said.

Economist Gift Mugano warned that there was a risk of the new notes flooding the black market, despite the good intentions of the central bank.

"Theoretically speaking what he (Mangudya) is saying makes sense because clearly he is looking at the minimum interna- tional ratio, which is at 16 percent, and so we need close to $2 billion in cash.

"If you go by the book it makes sense. However, in Zimbabwe it is the behaviour of the economic agents that is worrying.

"There is a hidden school of thought that says that the black market might use this as raw material to power its business, and so it must be monitored," Mugano said.

The latest measures were announced barely 24 hours after the government hiked the prices of petrol and diesel for the ump- teenth time this year.

On Monday, Zera increased the price of diesel from $16,75 to $17,47 a litre, and pegged the price of petrol at $15,64 from $14,97 a litre. The increases triggered fears all round that they would lead to fresh hikes of prices of goods and services.

What has also upset consumers and busi- nesses alike is that the ever-rising price of fuel has failed to improve the acute shortage of petrol and diesel in the country.

"Fuel is also a cost driver, but the key issue really is to do with the exchange rate. That is where the key drivers are. If liquidity is not managed, the economy will go into a spiral," industrialist Sifelani Jabangwe warned.

The president of the Confederation of Zimbabwe Retailers (CZR), Denford Mutashu, told the Daily News that price reviews would remain regular occurrences as long the economy was characterised by limited or constrained production.

"It is critical for Zimbabwe to urgently come up with a basic commodities avail- ability and price stabilisation facility as we approach the festive season.

"Companies require foreign currency to sustain operations and make goods available at affordable prices. The hyper-inflationary pressures keep mounting on business and the ordinary consumers by the day," he said.

Zimbabwe is currently going through its worst economic crisis in a decade, as the country battles acute shortages of foreign currency, fuel, electricity, medicines and water  which has triggered unrest among long-suffering citizens.

President Emmerson Mnangagwa has since openly admitted that Zimbabwe's economy was dead but wants more time to turn things around.



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