The land of bankrupt billionaires

The new bills officially come into circulation yesterday, Monday, but were already on the foreign currency dealers market on Saturday.

The new note is equal to just US$1 - and you can use it to buy four oranges, but you'll need more than that to buy a loaf of bread.

Once-prosperous Zimbabwe, previously known as southern Africa's breadbasket, has collapsed since it gained independence in 1980. The meltdown was triggered by Mugabe's often-violent land grab. White farmers were driven from the farms, which were then taken over by unskilled black farmers, many of them Mugabe's cronies. The result was the start of increasingly rapid inflation, with the official inflation rate now at 2.2 million percent. Nowadays, the country is referred to more as a basket case, than breadbasket.

Gideon Gono, governor of the Reserve Bank of Zimbabwe, said the new notes are for "the convenience of the banking public and corporate sector" in light of price hikes.

"The RBZ has noted with concern the unjustifiable and incessant general increases in prices of goods and services. It is therefore appealing to the business community to follow ethical business practices as well as take an interest in the plight of the general public," Gono said in a statement dated Friday.

Zimbabwe started issuing large banknotes in December, starting with denominations of Z$250,000 and carried on in January with more bills in denominations of Z$1 million, Z$5 million, and Z$10 million. Later, in May, it issued bills from Z$25 million and Z$50 million up to Z$25 billion and Z$50 billion.

With already limited buying power, the new bills also have limited life as they are actually bearer cheques and expire on December 31. Zimbabwe has not had formal currency since the introduction of bearer checks as a temporary measure in 2003.

"The RBZ is fighting a losing battle," said economist John Robertson in Harare. "As long as the inflation remains high, cash shortages will persist. There is need to address the inflation by increasing production so that too goods do not (cost) a lot of money."

Article courtesy thegreatzimbabwe.com