Wednesday, July 30, 2008

Zimbabwe Drops Tweleve Zeros From ts Currency

Zimbabwe will drop 10 zeros from its hyper-inflated currency _ turning 10 billion dollars into one _ the country's reserve bank said Wednesday. President Robert Mugabe threatened a state of emergency if businesses profiteer from the country's economic and political unraveling.

Note to Mugabe: Business "profiteers" aren't printing the money causing the inflation. The inflation is caused by the central bank printing money to pay for expenses of the Mugabe government.

Aggravating the problem are price controls which are resulting in shop shelves that are empty and there are chronic shortages of everything including medication, food, fuel, power and water. Eighty percent of the work force is unemployed and many who do have jobs don't earn enough to pay for bus fare.

Wednesday's announcement by central bank governor Gideon Gono that he was dropping 10 zeros from the currency, effective Friday, comes a week after he introduced a 100 billion-dollar note which was not enough to buy a loaf of bread.

Mugabe went on television immediately after Gono's announcement to warn against illegal money dealings and profiteering.

"Entrepreneurs across the board: Don't drive us further," he warned. "If you drive us even more we will impose emergency measures."

Gono said new money would be launched Friday with 500-dollar bills. He also said he was reintroducing coins, which have been obsolete for years. Bills will be back in the millions in record time if the central bank continues to print currency.

Gono said the high rate of inflation was hampering the country's computer systems. Inflation is officially running at 2.2 million percent in Zimbabwe but independent economists say it's closer to 12.5 million percent.

Computers, electronic calculators and automated teller machines at Zimbabwe's banks cannot handle basic transactions in billions and trillions of dollars.

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