Only in Zimbabwe: 10-Million-Dollar Bill

8 02 2008


Associated Press: LINK
By ANGUS SHAW

HARARE, Zimbabwe (AP) — Zimbabweans will be soon lining their pockets with 10-million-dollar bills.

The central bank annouced Thursday it would increase the denomination of the nation’s highest bank note more than tenfold to keep pace with the world’s highest inflation rate, officially estimated at 25,000 percent annually. Independent financial institutions say real inflation is closer to 150,000 percent.

The new 10-million note is the equivalent of about $4 at the dominant black market exchange rate.

In an effort to end chronic cash shortages and long, chaotic lines at banks and automated teller machines, the bank will issue the new notes on Friday along with 1-million and 5-million dollar bills, said Reserve Bank Governor Gideon Gono.

The highest existing note, introduced last month, is 750,000 Zimbabwe dollars.

A hamburger at an ordinary cafe costs about 15 million Zimbabwe dollars ($6). But that price has trebled this month amid shortages of bread, meat and most other basic goods.

Acknowledging the inflation crisis, Gono said individuals from Friday would be allowed to withdraw an increased limit of 500 million Zimbabwe dollars ($200) in a single day, up from 50 million.

He said special arrangements were being made to pay soldiers, police and other uniformed services “because it is not desirable to see them queuing for cash.”

With higher denomination bills, Gono said businesses might be tempted to again raise prices of scarce goods.

“If this happens, the whole objective of solving the cash shortages … will be defeated,” he said.

Zimbabwe’s economy began to crumble when President Robert Mugabe’s government stripped white Zimbabweans of their farms to give to blacks in 2000. The economic decline has caused runaway prices, chronic unemployment and acute shortages of basic goods, along with a decline in foreign investment over the past seven years.

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