Zimbabwe to withdraw its worthless currency for a year

April 12th, 2009 - 9:17 pm ICT by IANS  

Harare, April 12 (DPA) Zimbabwe’s new coalition government has decided to withdraw the country’s worthless currency from circulation for at least a year and rely exclusively on other hard currencies, according to reports Sunday.
Economic Planning Minister Elton Mangoma was quoted in the state-controlled Sunday Mail newspaper as saying that the Zimbabwe dollar, whose value was sent crashing by an official policy of the former regime of President Robert Mugabe to print huge volumes of cash to keep up with state spending, “will be out at least for a year”.

“We resolved there will be no immediate plans to introduce the money because there is nothing to support its value,” he said.

In late January, when it took 20 trillion Zimbabwe dollars to equal $1, the government adopted international hard currencies, mostly the US dollar and the South African Rand, as legal tender alongside the local currency.

Inflation running into percentage points with 15 zeroes had made trade in Zimbabwe dollars impossible and business was already conducted predominantly in hard currencies, albeit technically illegal.

“Our focus is to ensure that we first have a vibrant industry,” Mangoma said. “We must insure that the industry can hold the currency and enable it to trade with other currencies. If we try to reintroduce the local currency now, it will face the same fate of being wiped out of its value within weeks.”

The new power-sharing coalition government of Mugabe’s ZANU(PF) party and prime minister Morgan Tsvangirai’s Movement for Democratic Change, inaugurated in mid-February, has levied all taxes, duties and state services in US dollar terms while adopting the Rand as its official “currency of reference”.

The use of foreign currencies has seen critical shortages of all commodities, including basic foodstuffs, filling store shelves again.

The new administration has inherited an economy that was once one of the leading economies in Africa, but has been shattered by 85-year-old Mugabe’s policies, including the decimation of the country’s agricultural industry, previously the breadbasket of Africa, by the often violent eviction of around 90 percent of the country’s white commercial farming community.

The government says it needs $8.5 billion immediately to reconstruct the economy, but Western donors have said they will not contribute while the country’s security and judicial organs - still in Mugabe’s hands - continue to commit human rights abuses.

Tags: , , , , , , , , , , , , , , , , , , ,

Posted in Business |