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Zimbabwe begins issuing new banknotes to help ease cash crunch

Zimbabwe has the world’s second highest inflation after Venezuela, according to the International Monetary Fund.

A man holds one of the new two-dollar banknotes issued by the Reserve Bank of Zimbabwe in Harare, Tuesday, Nov, 12, 2019. The Reserve Bank of Zimbabwe began issuing new notes and coins on Tuesday, aimed at easing crippling cash shortages amid run away inflation.(AP Photo/Tsvangirayi Mukwazhi)
A man holds one of the new two-dollar banknotes issued by the Reserve Bank of Zimbabwe in Harare, Tuesday, Nov, 12, 2019. The Reserve Bank of Zimbabwe began issuing new notes and coins on Tuesday, aimed at easing crippling cash shortages amid run away inflation.(AP Photo/Tsvangirayi Mukwazhi)

By Farai Mutsaka, Associated Press

Zimbabwean banks have started issuing new notes and coins aimed at easing severe cash shortages, but they are severely limiting the amounts people can withdraw.

The new notes are the latest currency reform in the troubled southern African country’s constantly changing, and at times confusing, monetary framework.

Zimbabwe has the world’s second highest inflation after Venezuela, according to International Monetary Fund figures. With prices rising faster than at any point in a decade, amid rapid devaluation of the local currency, cash is king.

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A man with some of the new two dollars banknotes (Tsvangirayi Mukwazhi/AP)

In 2009, the government abandoned the local currency amid hyperinflation and adopted a multi-currency system dominated by the dollar.

In June the government outlawed the use of foreign currencies, opting for a local currency mainly consisting of electronic and mobile money and a trickle of banknotes.

President Emmerson Mnangagwa has struggled to fulfil promises to improve the economy two years after taking office following the resignation of the late Robert Mugabe.

Many retailers and service providers now demand payments in cash only. Others, including street vendors, charge a higher price for goods paid for using mobile money or bank cards.

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Bags of coins are issued along with the notes (Tsvangirayi Mukwazhi/AP)

The Reserve Bank of Zimbabwe said it will “drip feed” a billion Zimbabwean dollars in the new small notes and coins to manage the cash shortages. The highest denomination is 5 dollars. The notes are similar in design to the old ones.

“What can I do with such a pittance?” asked Shorai Tomu after withdrawing the equivalent of about £4. “It can only buy five loaves of bread.”

“It is just like the old money, and like the old money it can’t buy anything of value,” said 81-year-old Filbert Sibanda after withdrawing his monthly pension, enough to buy a kilogramme of beef.

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Customers queue to withdraw cash from a bank in Harare (Tsvangirayi Mukwazhi/AP)

Other customers left disgruntled.

“This is not an improvement,” said Wicknell Magidha, waving a few new notes and a plastic bag filled with coins. “These coins are just too heavy.”

People trooped out of one bank carrying similar bags of coins, shaking their heads. Others in line laughed.

Mr Magidha said the small bills and coins leave him with another headache – haggling with traders who usually reject them.

“The same item can have three different prices: one for cash, one for mobile money and another one for those paying using small coins,” he said. “The government should just print higher denominations to match this inflation.”

PA

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