Cash Shortages Loom As Persistent Problem For Zimbabwean Economy
One critic charged that the Reserve Bank of Zimbabwe “cut its cash allocations to commercial banks by 50% at the very same time that de
Zimbabwe's persistent cash crisis went onto the back burner Tuesday with financial institutions closed for New Year’s. But consumers, businesses and bankers could face further turmoil Wednesday as some banks were said to have run out of cash late on Monday despite the central bank's extension of the life of its Z$200,000 notes. Reserve Bank of Zimbabwe Governor Gideon Gono said he was reversing himself on the scheduled Dec. 31 expiration of the Z$200,000 bearer cheques (central bank promissory notes that have long served in the place of full-fledged currency). The decision left a large volume of cash available in the financial marketplace. Gono has blamed heavy rains and floods for his bank’s slow distribution of new bearer cheques, but has come under fire from all quarters for the crisis. One of the more surprising broadsides came from Media and Information Commission Chairman Tafataona Mahoso, who in his regular column in the Sunday Mail alleged that the cash crisis was engineered and calculated to tarnish the image of the government. He pinned the blame squarely on the central bank itself. Mahoso said the Reserve Bank had “cut its cash allocations to commercial banks by 50% at the very same time that demand for cash was escalating." Others have taken the RBZ to task for failing to distribute enough bank notes to meet demand given the country's soaring inflation rate, and for not issuing larger denominations. Acute cash shortages have intensified Zimbabwe's general economic implosion, which continues with hyperinflation that some economists estimate over 50,000% and chronic scarcities of the most basic necessities, especially food. After standing in line for days to get cash, Zimbabwean consumers with money to spend face the equally arduous task of finding maize meal, cooking oil, sugar, milk and other foodstuffs which sources said were not generally available in shops.