Zim: New bank rule causes chaos
Oct 03 2008 14:50
Harare - Confusion struck Zimbabwe's financial system Friday after the central bank stopped electronic transfers, following the currency's crash to a new record low.
State radio quoted Reserve Bank of Zimbabwe governor Gideon Gono as saying that electronic transfers had been suspended because they were "being used for illicit foreign exchange deals," and by businesses "to overprice their goods and services."
"We have no option but to take this drastic measure in order to maintain sanity in the financial system," he said.
A chronic shortage of cash in Zimbabwean currency means people have virtually abandoned changing the near worthless money for foreign currency on the street as had been the norm. Recently, most have been getting hard currency through electronic transfers.
Gono's announcement came as the exchange rate for electronic
transfers on Thursday plunged to Z$1m for US$1, just two months after the central bank slashed 10 zeroes off
the currency on August 1.
Despite the drastic revaluation, the currency has continued to
haemorrhage. Its current value is one ten-thousandth of that at the beginning of August.
Gono said people would have to use cheques and debit cards to pay for goods, although debit cards are usable in only a few dozen supermarkets nationwide.
"There's a lot of confusion," said a business executive who asked not to be named. "The banks are now saying that you can't do internal transfers within the same bank, and even internet banking is banned.
"Cheques are a real hassle, it takes five days to clear, and in this crazy economic climate you can lose a huge amount of money in that time."
Zimbabwe's economic decline has reached a break-neck pace in recent months. Inflation is estimated at 40 million per cent, among the top five levels in history worldwide.
The printing of cash by the central bank to meet President Robert Mugabe's regime's voracious appetite for spending and his disastrous transfer of productive white-owned farms to inexperienced farmers are seen as the chief reasons for the country's nosedive.
On Wednesday, a cup of coffee at the capital's Holiday Inn hotel
cost Z$1.5m. A police constable is paid Z$10 000 a month.
On Monday, in a bid to end mammoth queues outside banks for cash, Gono increased the maximum ATM withdrawal amount 20-fold and introduced new bank notes.
- Sapa-dpa
