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Gono to introduce new currency
                            By Blessing Chapwati   [29-07-08 1335]
HARARE - Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono will on Wednesday announce his half-year monetary policy statement which many expect to address the prevailing cash crunch and monetary measures to tame the run-away inflation the country is experiencing.

Gono who hinted on Saturday during the opening of the Midlands agricultural show is expected to slash zeros on the current notes and introduce new currency as a reprieve to the current cash shortages.

“I am, therefore, very confident that this coming week will bring about the much needed relief in our national payment system,” Gono said. Zimbabweans have experienced serious cash shortages in recent weeks owing to low daily maximum withdrawals.

Individual savings account holders are allowed $100 billion maximum daily withdrawals enough for a one way trip from home to town for most Harare residents.

The $100 billion is not enough to buy a loaf of bread. The Central Bank has in the past encouraged the use of plastic money but the facility has been overwhelmingly overloaded where in some instances long queues are now a common site in most shops with shoppers trying to buy basic commodities that in short supply.

Sources say Gono could introduce a $500 billion and a trillion dollar denomination of bearer cheques, barely a week after introducing the $100 billion note.

The RBZ introduced new 10 million; 50 million 100 million and 250 million dollar notes during the first quarter of this year but all have been eroaded by inflation now estimated over 2.2 million percent.

Most businesses, individuals and institutions are now pegging prices against parallel market rates where huge disparities are now obtaining.

Since last week when the liquidity crunch hit, parallel market dealers have been affected owing to cash shortages.

One US Dollar is trading at 1 trillion Zimbabwean dollars where USD100 is equivalent to 10 trillion enough to buy less than a week of food for a family of five.

However a huge disparity is obtaining between the electronic transfer rate and the parallel market rates. The electronic transfer rate is eight trillion to one USD making it 80 trillion for USD100.

Buying using the electronic transfer system has been a better option for doing business but of late most businesses are now asking double for any good that one wants to buy using facility.

For instance, if a good costs 10 trillion, a shopper will have to pay double the price. Most business owners say shoppers are taking advantage of the electronic transfer system to buy goods for less after exchanging hard currency.

On the 11th of July the Reserve bank lifted the $900 billion dollar cheque limit for individuals and companies but most business owners are not accepting cheques on reasons that by the time a cheque is cleared by the bank its value would have been eroded by inflation.

Zimbabwe has suffered a record economic crisis that President Robert Mugabe blames on sanctions imposed by Western countries in a bid to end his iron grip on power.

President Mugabe has maintained that the west has imposed sanctions to effect regime change and reverse the controversial land reform programme which saw white farmers losing their farms at the height of the farm invasions in early 2000.
Critics blame the economic meltdown on wrong policies.

Economic analysts have warned that Wednesday’s policy statement will not bring much change to the economy owing to the central bank’s quasi-fiscal engagements and continued money supply growth which has fuelled inflation in recent past.