New Zim bank note unveiled

July 31 2007 at 06:09PM

Harare - The central bank unveiled a new 200 000 Zimbabwe dollar (about R5 600) note on Tuesday, double the face value of what had been the highest denomination bill in a country where bundles of notes are needed for the simplest transactions.

The Reserve Bank said in a statement circulation of the new 200 000 Zimbabwe dollar bill from Wednesday was for "convenience" in business and individual transactions.

The bill is worth $13 at the official exchange rate or $1 at the dominant illegal black market rate. With five bills a Zimbabwean millionaire can buy a handful of scarce food items.

Runaway inflation has led to bundles of bills being needed for routine purchases. Few businesses or even government departments, including the tax office, accept checks, demanding cash or same-day bank-to-bank transfers, for fear the value of the currency will plummet even further before checks can clear.

Zimbabwe is in its worst economic crisis since independence from Britain in 1980, blamed largely on disruptions in the agriculture-based economy in the former regional breadbasket after the often violent seizures of thousands of white-owned commercial farms began in 2000.

Last August, the central bank slashed three zeros from the currency and issued new notes, saying the old cash had become unmanageable and computerised accounting and regular electronic calculators were unable to cope with the number of digits in routine transactions.

Since then, official inflation has trebled 4 500 percent, the highest in the world. Independent finance houses estimate real inflation closer to 9 000 percent.

A government edict to slash all prices last month in a bid to curb inflation has left shelves across the country bare of corn meal, meat, eggs, milk and other staples.

Acute gasoline shortages have crippled transport and commuter services. The price of gas has been slashed to half the cost of importing it.

At least 5 000 businessmen, including some of the country's top corporate directors, managers and street vendors have been arrested, briefly held and fined for failing to obey the June 26 price cut edict. - Sapa-AP