Zimbabwe’s ‘cosmetic’ cash reforms rapped

HARARE, Aug 6, 2006 (AFP) – Zimbabweans last week flooded banks to hand in old notes after the central bank slashed three zeroes from the local currency, but analysts said the new money would not provide relief from record inflation. Zimbabwe’s Reserve Bank slashed three zeroes from its currency last Monday to help consumers battling with bundles of money on shopping trips which can cost billions and trillions of local dollars.

The change, which ushered in a new currency, is also aimed at compelling individuals and companies to bring in billions of dollars stashed away in safes and combatting a burgeoning black market in currency, central bank chief Gideon Gono said.

Since Monday state television has been screening an advertisement in which an ecstatic housewife hails the currency change saying a loaf of bread which cost 200,000 Zimbabwe dollars “now costs only 200 dollars.”

Independent economist John Robertson told AFP: “The currency change is a purely cosmetic exercise which won’t overcome the problems facing the country.

“It will only work as far as reducing the volumes of bank notes people will carry but it does not provide solutions to the main problems of inflation, lack of investment and high unemployment.”