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(ALLAFRICA) Zimbabwe: Reserve Bank to Launch New Currency

Zimbabwe: Reserve Bank to Launch New Currency
SW Radio Africa (London)
1 October 2007
Tichaona Sibanda

According to Reserve Bank Governor Gideon Gono the country's central bank will soon launch a new currency in a bid to curtail a widely-used black market for foreign exchange and fight the world's highest rate of inflation. Speaking on Monday Gono also announced that the central bank would raise its main lending rate from 650 percent to 800 percent to tame the 'angry and formidable' inflation. The opposition MDC described the plan to introduce a new currency as 'madness' and a dream by the government.

The acting treasurer-general of the Tsvangirai camp, Elton Mangoma said a new currency at this stage of the economy won't help as it would also rapidly depreciate on a daily basis.

'I really think these guys have no other plans for this economy. If they believe their new policies will work then god help them,' Mangoma said.

Presenting his delayed mid-term Monetary Policy review statement, the Reserve Bank Governor warned it would be a 'hurricane' for those who keep huge cash outside the formal banking system.

'I can confirm that (a new currency) is coming and coming very soon,' Gono said. He added that dealers should not hold cash outside the banking system.

The Reserve Bank governor also adviced the cash and money barons who he said are in the habit of creating mini central banks to compete with the central bank, to take heed of this advice, 'which is free.'

On inflation, Gono said, 'the threat of continued inflationary pressures remains high. In order to repel speculative tendencies, the overnight accommodation rate has been increased, with immediate effect,' he said.

In his televised speech, Gono said inflation should decelerate in the medium term but could come under more pressure from spending ahead of the country's joint parliamentary and presidential elections in 2008.

'I never dreamt that we would get to these levels of inflation but I am not deterred, the outlook in the short term is that our number one enemy remains very angry and formidable. In the medium term however, we will see a steep deceleration of the pace at which the enemy will be charging towards us on the back of improved production and supplies,' he said.

Gono also urged lawmakers to consult widely before moving ahead with a controversial bill that would transfer majority control of foreign banks and mining companies to Zimbabweans.

Labels: CURRENCY, INFLATION, ZIMBABWE

posted by MrK @ 5:45 AM