Back to Index

This article participates on the following special index pages:

ZIMBABWE: Army enforces new monetary policy
IRIN News
August 07, 2006

http://www.irinnews.org/report.asp?ReportID=55022

HARARE - Zimbabwe's new monetary reforms have managed to court the ire of nearly everyone - the struggling poor, the middle class and the rich ruling elite, who were caught off guard and are feeling the pinch most.

Reserve Bank Governor Gideon Gono's announcement last week that citizens had three weeks to exchange old currency for new denominations had a catch: individuals were only permitted to exchange Z$100 million (US$1,000 at the official rate) each working day, which meant the most any individual could exchange was Z$16 million (US$16,000) before the 21 August deadline.

"Most of the corruption that was taking place, like market manipulation and forex deals, were done by the ruling class, and the new monetary policy is going to affect them the most," said independent economist James Jowa. "What Gono has done is to create animosities. A lot of senior people were caught with their pants down and they are very upset."

Unlike in the past, when the entire cabinet was privy to monetary policy, this time only President Robert Mugabe and security ministers were forewarned of the currency reforms.

In an apparently conciliatory approach to cabinet ministers, Gono recently told business leaders that "it was not out of disrespect that you were not informed, but when you are in a war you don't climb on a mountain and inform the enemy that you are going to war."

Zimbabweans with little or no confidence in the banking system kept money at home, with some reports claiming that people were keeping as much as Z$15 billion (US$150,000).

The target of the currency reform was informal traders, parallel market foreign currency dealers, and the corrupt, who kept trillions of dollars outside the banking system in order to buy scarce foreign exchange.

Police, assisted by youth militia of the ruling ZANU-PF party, set up roadblocks to confiscate money from people carrying more than Z$100 million (US$1,000). Over 2,000 people have been arrested and more than Z$20 billion (US$200,000) confiscated in the nationwide blitz.

Soldiers have also appeared on the streets of Harare, the capital, in the last three days and there are reports of random beatings by soldiers accusing people of sabotaging the economy.

In another recent address, Gono, who has been said to have aspirations to the presidency after Mugabe leaves office, told the audience that senior government officials were deliberately sabotaging the economy. "As we speak, there are Zimbabweans in positions of authority who are saying they will make sure that our policies will never work because their deals will be frustrated."

Gono's polices and bold statements appear to have the backing of Mugabe, who said in recent luncheon speech, "Mr Governor, there are some circles that do not like you, to the extent that they wish you dead. They are saying you are destroying their business empires. But I am sure that without the work done by the reserve bank, we would not be where we are now."

Zimbabwe Lawyers for Human Rights, a legal aid nongovernmental organisation (NGO), said their offices had received numerous complaints about the conduct of officials at roadblocks. "Generally, the complaints that we have received are about the fact that people are being stripped by the militia, who do not have arresting powers. They say the type of searches that are being done are no different from being sexually molested. Their goods and money have been seized from them," said Jacob Mafume, an organisation official.

"What is actually bizarre is that people are being arrested while on their way to put the money back into circulation," he said.

After Gono announced that three zeroes would be struck off the country's temporary currency of bearer cheques, Zimbabwe's new exchange rate is Z$250 to US$1. Before the devaluation last week, the official rate was Z$250,000 to the US dollar, and Z$555,000 on the parallel market.

Please credit www.kubatana.net if you make use of material from this website. This work is licensed under a Creative Commons License unless stated otherwise.

TOP