Business News

Ever bigger Zimbabwe bank notes: 50-billion-dollar "agro cheque"

May 15, 2008, 10:55 GMT

Johannesburg/Harare - The Reserve Bank of Zimbabwe (RBZ) on Thursday announced the launch of a new 500-million-dollar bank note for the general public as well as a 50-billion-dollar note for farmers.

In a statement acting RBZ governor Charity Dhliwayo said the 'agro cheques,' which will also be available in 5 billion and 25 billion denominations, 'seeks to bring convenience to our farmers.'

All the new notes, which, like all Zimbabwe banknotes are actually bearer's cheques with an expiry date, will be available from next week.

The 'agro cheques' are set to expire in December when the agricultural selling season ends.

In a sign of the rate at which Zimbabwe's economy is plummeting the Reserve Bank only last week introduced a 250-million-dollar note, but that has failed to address the cash shortages driven by inflation of at least 165,000 per cent.

The inflation rate - the world's highest - has made the Zimbabwe dollar virtually worthless. One US dollar is worth around 250 million Zimbabwe dollars.

Commenting on the introduction of the new bills, prominent Zimbabwean economist John Robertson said they would only would push inflation higher.

'As long as there is no production, the issue of inflation will not be addressed. Assuming they (the RBZ) print enough cheques to end cash shortages, the problem of so much cash chasing too few goods will remain.'

'We are addressing the symptoms (cash shortages) and not the problems which are shortages and low production in the manufacturing and agricultural industries,' he said.

Zimbabwe's economy has been in free fall since 2000 when agriculture production slumped after President Robert Mugabe endorsed a violent land seizure programme. Mugabe is currently squaring up to do battle in a second round of voting for president against opposition leader Morgan Tsvangirai.

The new half-billion-dollar note will not be enough to buy three loaves of bread. A loaf of bread currently costs around 200 million dollars.