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Cash crisis hits banks again
The Standard (Zimbabwe)
November 11, 2007

http://www.zwnews.com/print.cfm?ArticleID=17704

The banking sector has joined the current "queue" phenomenon in Zimbabwe, if what was witnessed in the past week is anything to go by. A snap survey by The Standard in Harare yesterday showed the return of long queues for cash in many banks, some of them stretching to the pavements outside the banks. A banking executive said the queues were a result of the high demand for cash as people bought scarce groceries in preparation for the festive season. He said the challenge was that ATMs could only dispense a maximum of $8 million in one transaction. "What it means is that if you want to withdraw $20 million, you have to conduct three transactions at the machine," he said. "If you are number 20 in the queue and the people ahead of you are withdrawing $20 million each, it means you are actually number 58." He said the introduction of higher denomination notes of $1 million would result in the queues moving faster.

The central bank recently announced it intended to introduce a new currency before the end of the year, but abruptly made an about-turn, deferring the move to next year. It was speculated that the RBZ governor Gideon Gono was feeling the hyper-inflation heat and intended to lop off the zeros as he did in August last year. Analysts said the queues reflected the devastating effects of hyper-inflation. "It is a repetition of the situation we had 18 months ago," said economic commentator Eric Bloch. "We have to slash the zeros to stabilize the currency because very soon cash registers will not cope." Zimbabwe has the highest inflation rate in the world - 7 982.1%, eroding the purchasing power of the currency. Analysts say without putting in place sound economic measures, the country will continue to fail to contain the hyper-inflation, whatever monetary or fiscal gymnastics are implemented to tame the scourge. Questions sent to the Reserve Bank of Zimbabwe had not been responded to at the time of going to press.

Meanwhile, in the central business district of Harare yesterday, people had to make withdrawals inside the banking halls, instead of using the Automated Teller Machines, as only $1 000 notes were available. The ATMs dispense the higher denomination $200 000 and $100 000, although the limit is $8 million a transaction. "Some businesses no longer accept these $1 000 notes," said Ignatius Phiri, lugging two heavy bundles of the notes, totalling the maximum $20 million he had withdrawn. "I know I will have problems with kombi crews and some retailers." Bus fares can now cost as much as $500 000 for one trip. Nyarai Chimhanda of Belvedere urged the banks to take urgent steps to avert a looming crisis ahead of the festive season. "Imagine one's mood if they queued for the money to buy groceries and then from there start queuing for each and every item for their Christmas basket?" she said. "That would be enough to kill the Christmas spirit." Efforts to get comment from Bankers' Association of Zimbabwe president Pindie Nyandoro were all in vain.

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