New banknote for Zimbabwe

[ This article is from Sunday Times, South Africa. ]

New banknote for Zimbabwe
Wednesday February 01, 2006 14:48 - (SA)


HARARE - Zimbabwe's central bank has introduced a new 50,000-dollar banknote equivalent after it conceded that runaway inflation would soon shoot up to a record 800%.

The new purple denomination with a picture o the world-famous Victoria Falls, worth around 50 US cents or 40 euro cents, is the latest addition to a series introduced three years ago with a set validity period to ease critical cash shortages across the country.

"We have begun to use the new bearer cheque from today," Reserve Bank spokesman Kumbirai Nhongo said.

"It's not a new currency as such but a higher currency in the bearer cheque range which we are introducing as a temporary measure as we prepare to introduce a new currency later this year."

Zimbabwe is in the throes of economic crisis characterised by three-digit inflation, soaring poverty levels, an unemployment rate hovering at over 70% and chronic shortages of fuel and basic goods like cornmeal.

Central bank governor Gideon Gono has warned that annualised inflation could peak at 800% in March and later recede to below 500% in June before reaching double-digits in 2007, if there are bountiful rains leading to a good harvest.

At the country's independence from British colonial rule in 1980, when the local dollar was roughly at parity with the pound sterling, Zimbabweans used cents, one dollar coins and bank notes in four denominations.

However, due to inflation, the Zimbabwe government introduced four new denominations from 2001 while coins were phased out as the value of the Zimdollar continued to depreciate against major currencies.

Between May and September 2003 the country experienced critical cash shortages which prompted the reserve bank to issue three new denominations - called bearer cheques - the highest of which was for 20,000 Zimbabwean dollars.

The new 50,000-dollar banknote is valid until December.

Sapa-AFP