Zimbabwe scraps Z$200k banknote
Robert Mugabe's policies have wrecked the Zimbabwean economy
Thursday, 20, Dec 2007 02:14
Zimbabwe's central banker has scrapped his country's Z$200,000 (£3.35) note in a bid to stop hyperinflation.
Gideon Gono announced the banknote would cease being legal tender after December 31st, saying it was primarily being used by "cash barons" blamed for the ongoing crisis.
He claimed all but Z$2 trillion (£33.5 million) of the Z$67 trillion (£1.12 billion) in the Zimbabwean economy was held by hoarders and accused retailers, bank employees and senior government officials of money laundering and other corrupt activities.
In its place new Z$250,000 (£4.19), Z$500,000 (£8.38) and Z$750,000 (£12.57) banknotes will be issued, a move dismissed by western economists as being inadequate to meet the country's problems.
Inflation in Zimbabwe is currently running at around 8,000 per cent, making the highest new banknote barely sufficient to purchase a loaf of bread.
Blunt measures like forced price cuts from the Harare regime of president Robert Mugabe have led to the creation of a parallel market but the country's economic problems remain unsolved, observers say.
Current difficulties began after Mr Mugabe began his controversial land reforms in 2000.
Since then the Zimbabwean economy has entered freefall, with agricultural productivity collapsing. Aid agencies warn six million people may be in danger of starvation if the crisis continues.