Notice by John Robertson:
Having been appointed as Reserve Bank Governor for another five years, Dr Gono has presented an acceptance statement in which he commits himself to “ensuring continued financial sector stability through insightful surveillance and insistence for discipline and prudential risk management systems in the banking system”.
All who know Zimbabwe’s recent history will consider Dr Gono’s phrase "ensuring continued financial sector stability” to be an extraordinary flight of fancy, considering the degree of instability that has consumed Zimbabwe’s financial sector and the rest of the economy in the past five years.
However, his response to his appointment will be of interest to many, particularly those who might want to further explore Dr Gono’s claim that “all the Bank’s quasi-fiscal outlays since 1 December, 2003 have been fully amortized”, even though last week he admitted that the total had reached more than “Z$1 hexillion.
As the word “hexillion” does not appear in any of my dictionaries, I had to work to the 21 zeros offered in his explanations and discovered that our quasi-fiscal expenditures – spending that was not funded by the fiscus and therefore not funded by tax revenues – had exceeded a total of Z$1 sextillion in the five years since Dr Gono took office.
His claim that to settle this amount “there will be absolutely no penny to be transferred as a burden on the fiscus, and hence the tax payers” is actually not so surprising. Amortisation as a process is not involved. The money was not borrowed from anyone, so it does not have to be paid back to anyone. That much money didn’t even exist. But government needed it and it empowered the Reserve Bank Governor to simply bring it into existence.
And in exercising his powers, the Governor very effectively demolished Zimbabwe’s financial system. In the process, the country has also experienced the demolition of most of its productive capacity, most of its service sectors, a large part of its infrastructure, its dependability as a supplier of commodities and manufactured goods and its credibility as an investment or tourist destination.
Demolition also describes what has happened to Zimbabwe’s education and health sectors, to its vocational and technical training capacity, to the competence of local authorities and to the effectiveness of every one of government’s ministries too.
We’re now all too well aware that money that is not generated by the act of producing goods to buy will simply force up the prices of everything. More accurately, it will force down the value of all money, whether it was properly earned or merely printed. And now, in effect, the Reserve Bank Governor is proudly saying that by forcing the value of Z$1 sextillion to become virtually nil, this huge sum has become irrelevant and will therefore not be a burden on the taxpayer!
The taxpayers have already been crushed by the inevitable inflation, but for that achievement, Dr Gono has been rewarded with another five-year term. He has promised – before the end of the year – a “defining Monetary Policy Statement that will lay the solid framework and thrust of Monetary Policy over the next five years”.
We must all continue to hope for better things, but I regret to say that it is not yet safe to hold our breath while waiting for them!
I have attached the full text of Dr Gono’s statement. I hope you find more enlightenment in it than I did.
Kindest regards,
John
APPOINTMENT ACCEPTANCE STATEMENT BY
DR G. GONO GOVERNOR RESERVE BANK OF ZIMBABWE
26 NOVEMBER 2008
1. INTRODUCTION AND BACKGROUND
1.1 Pursuant to His Excellency, The President of the Republic of Zimbabwe, Cde R.G. Mugabe’s, in consultation with the Minister of Finance, decision and expression of confidence in me that I serve the Nation for another 5 years as Governor of the Reserve Bank of Zimbabwe, in terms of Section 14 of the Reserve Bank of Zimbabwe Act (Chapter 22:15), I wish to humbly accept this appointment and recall to National duty.
1.2 I deeply thank the Country’s Leadership for this continued faith in me.
1.3 Having served my first term of office since 1 December, 2003, I am all too aware of the limitations and setbacks that I met with over the past 5 years and I am determined, with the help of willing stakeholders, to overcome these setbacks, be they personal, institutional or economy-wide. Together we will make it.
2. VISION FOR THE NEXT 5 YEARS
2.1 At this juncture, the signals that I can give as guidance to our financial markets and to the economy in general are that the next 5 years must see full and successful turnaround of our economy.
2.2 Under this Vision, turnaround of the economy entails, us collectively ensuring that within the next 5 years, we secure an economy characterized by the following key factors, among several other imperatives:
4 (a) Low and stable single-digit inflation, anchoring a stable and predictable business environment as well as protecting the welfare of workers and the generality of Zimbabweans;
(b) Ensuring continued financial sector stability through insightful surveillance and insistence for discipline and prudential risk management systems in the banking system. Over the outlook, discipline will be the utmost driving principle, particularly in the banking sector;
(c) The economy being able to internally generate sufficient foreign exchange resources to meet its basic requirements in the productive and social sectors. This foreign exchange generative capacity will be anchored primarily on policies and programmes that hold high producer viability and export competitiveness;
(d) Re-instating Zimbabwe’s rightful place in regional and international money and capital markets through constructive engagement of creditors, supported by internal implementation of credible, comprehensive and consistent macroeconomic policies; and
(e) Anchoring Zimbabwe’s developmental programmes on the effective productive use of internal resources, particularly in the country’s extractive industries, led by mining.
2.3 Much the same way to some it may at first seem a far-fetched stretch of imagination to think of and plan for a hot summer when in the middle of a grueling winter, the above Vision for Zimbabwe is well within reach, notwithstanding our present difficult circumstances.
2.4 Yes, at current levels of above 200 million percent, Zimbabwe has the highest level of inflation in the world.
2.5 True, with barely 2 months import cover in foreign exchange reserves, the country has to press hard in generating foreign currency inflows.
2.6 To those who do not see beyond their noses; and to those who do not have faith in the power of dedicated intentions, our current circumstances may seem too daunting to overcome.
2.7 But as Governor, I have no doubt in my mind that a combination of comprehensive macroeconomic policies, discipline, a shared vision and hardwork all-round will see us achieving the outcome of a better and prosperous economy over the not too distant future. Together we will make it.
MONETARY POLICY STANCE
2.8 As I accept this extended call of National duty, I pledge to maintain a very tight monetary policy stance, anchored on the comprehensive realignment and streamlining of the Reserve Bank’s functions in a manner that leaves Monetary Authorities with the core responsibilities of inflation-targeting, management of the National payments systems and safeguarding financial sector stability.
2.9 With effect from January, 2009, therefore, the Reserve Bank will be focusing on the core businesses of inflation control and financial sector stability.
QUASI-FISCAL OPERATIONS
2.10 Under the new thrust, it would be expected that all our parastatals, local authorities and all Government Departments and Ministries will fully discharge their statutory mandates without the need to rely on the Central Bank for assistance.
2.11 By engaging in the various quasi-fiscal operation, we undertook over the past 5 years, these were extraordinary steps which were meant to address extraordinary circumstances and realities that were on the ground.
9 2.12 As such, the quasi-fiscal operations were deployed as survival interventions in the National interest.
2.13 Under the new thrust, the Reserve Bank will soon establish a stand alone, self-funding and well capitalized developmental institution that will manage all the work-in progress under the previous quasi-fiscal desks of the Bank, as well as meeting any other developmental programmes as they would arise in future, leaving the Bank with core functions.
2.14 I also wish to take this opportunity to once again re-affirm the Bank’s position and assurances to stakeholders that all the Bank’s quasi-fiscal outlays since 1 December, 2003 have been fully amortized such that there will be absolutely no penny to be transferred as a burden on the fiscus, and hence the tax payers.
2.15 This progressive position will be confirmed by the Bank’s External Auditors as part of their due- diligence on our financial records.
FOREIGN EXCHANGE MOBILIZATION
2.16 An honest assessment of what will take the economy off onto the recovery and growth path identifies foreign exchange availability as a key determinant factor that cannot be wished away.
2.17 For this reason, the outlook period will see unprecedented vigor in mobilizing foreign exchange through the strategic deployment of the country’s natural resources, as well as those parastatal assets and shareholdings that are amenable to private sector participation.
SANCTIONS
2.18 As a Nation, recognizing the devastating effects of sanctions against us, we must speak with one voice for their removal, whilst at the same time accepting the likelihood that such sanctions may be a phenomenon that may haunt us for a long time to come.
2.19 We must, therefore, work towards sweating of our internal assets, hoping that those imposing the sanctions will eventually allow the principles of objectivity, just, common sense and cordial humanity to prevail in the judgments of our internal situation.
SINCERE GRATITUDE
2.20 I would like to also take this opportunity to thank my entire Team at the Reserve Bank, together with all the other stakeholders who stood firm on my side, especially during the multiple low moments I encountered over the past 5 years, all as part of discharging the statutory mandate I am honoured to be entrusted with.
2.21 In ending, I wish to give the Nation advance notice that before the end of December, 2008, a defining Monetary Policy Statement will be issued to lay the solid framework and thrust of Monetary Policy over the next 5 years.
2.22 To the Great People of Zimbabwe, I want to say thank you for the continued confidence in me.
2.23 I commit to serving the Nation selflessly, with enthusiasm, integrity, objectivity, economic patriotism and all this under the Zimbabwe First principle.
2.24 To those who differed and continue to differ with the Reserve Bank’s way of doing things, I wish to humbly reassure them that the Central Bank’s doors, the Governor’s doors in particular, are always open for stakeholders to air their strongly felt suggestions.
2.25 As Governor, I will listen to all views as they come in and assimilate constructive inputs into the policy pronouncements my Team and I will make.
14 2.26 Consistent with this open door policy, I hereby invite those in industry, agriculture, tourism, mining, services, the financial sector, employers’ representative bodies, labour bodies, consumer representatives, retailers, churches; interest groups and any other interested members of society to submit their contributions into the forthcoming Monetary Policy Statement by the 10th of December, 2008.
2.27 These inputs will be considered as part of our economic roadmap over the next 5 years.
Thank you.
DR G. GONO
GOVERNOR RESERVE BANK OF ZIMBABWE
26 November, 2008
Friday, November 28, 2008
Wednesday, November 26, 2008
Old Mutual Says Too Many Zeroes Delay Zimbabwe Payout
By Vernon Wessels and Brian Latham
Nov. 25 (Bloomberg) -- Old Mutual Plc, the largest insurer in Africa, said it is delaying dividend payments to Zimbabweans because the country’s banking system cannot process the zeroes involved in the transaction.
“The banking system in general is having difficulties with the size of the numbers involved,” Matthew Gregorowski, a spokesman for London-based Old Mutual, said by phone today. It was an “temporary processing issue” which would be solved soon, he added.
The Old Mutual first-half dividend amounts to 453 trillion Zimbabwean dollars, the company said in a statement to the Johannesburg stock exchange today, which converts to $9.3 million at the government’s official exchange rate. The dividends were due Nov. 28 and will be paid once the banking difficulties have been resolved, it said.
Zimbabwe has the world’s highest inflation rate, estimated at 231 million percent, spawned by a decade of economic recession that caused shortages of food, fuel and other basic commodities.
The Zimbabwe dollar traded at 48.484 per U.S. dollar on the interbank market yesterday. On the black market, where most Zimbabweans buy their foreign exchange, the rate is 230 trillion against the U.S. currency. The Old Mutual Implied Rate, used as a guide by businesses in Zimbabwe, today valued the currency at 13 quintillion to one U.S. dollar.
‘Dividend Halved’
“It might have been better for Old Mutual to give investors extra shares instead of cash payments as these may be worth something in future,” said John Robertson, an independent economist in Harare. “The value of the dividend will halve each day” because of inflation, he added.
“Everything is difficult to do in Zimbabwe right now,” Robertson said. The economy, crippled by a shortage of goods, foreign currency and skills, has come to a standstill because people cannot withdraw money from banks. “This country needs investment flows, not aid, and this will only come once the political situation has been resolved.”
To contact the reporter on this story: Vernon Wessels in Johannesburg at vwessels@bloomberg.net; Brian Latham via Johannesburg at pmrichardson@bloomberg.net. Last Updated: November 25, 2008 09:47 EST
Nov. 25 (Bloomberg) -- Old Mutual Plc, the largest insurer in Africa, said it is delaying dividend payments to Zimbabweans because the country’s banking system cannot process the zeroes involved in the transaction.
“The banking system in general is having difficulties with the size of the numbers involved,” Matthew Gregorowski, a spokesman for London-based Old Mutual, said by phone today. It was an “temporary processing issue” which would be solved soon, he added.
The Old Mutual first-half dividend amounts to 453 trillion Zimbabwean dollars, the company said in a statement to the Johannesburg stock exchange today, which converts to $9.3 million at the government’s official exchange rate. The dividends were due Nov. 28 and will be paid once the banking difficulties have been resolved, it said.
Zimbabwe has the world’s highest inflation rate, estimated at 231 million percent, spawned by a decade of economic recession that caused shortages of food, fuel and other basic commodities.
The Zimbabwe dollar traded at 48.484 per U.S. dollar on the interbank market yesterday. On the black market, where most Zimbabweans buy their foreign exchange, the rate is 230 trillion against the U.S. currency. The Old Mutual Implied Rate, used as a guide by businesses in Zimbabwe, today valued the currency at 13 quintillion to one U.S. dollar.
‘Dividend Halved’
“It might have been better for Old Mutual to give investors extra shares instead of cash payments as these may be worth something in future,” said John Robertson, an independent economist in Harare. “The value of the dividend will halve each day” because of inflation, he added.
“Everything is difficult to do in Zimbabwe right now,” Robertson said. The economy, crippled by a shortage of goods, foreign currency and skills, has come to a standstill because people cannot withdraw money from banks. “This country needs investment flows, not aid, and this will only come once the political situation has been resolved.”
To contact the reporter on this story: Vernon Wessels in Johannesburg at vwessels@bloomberg.net; Brian Latham via Johannesburg at pmrichardson@bloomberg.net. Last Updated: November 25, 2008 09:47 EST
Wednesday, November 19, 2008
An this is what we have to put up with!!!
Coping with zeros
Some punters on the stock exchange must have in recent days been wondering what to
write on their cheques when dealing with large sums of money. The following table
contains large numbers up to 1 followed by 33 zeros, which should allow everyone to
come to terms with huge figures.
Name Number of Zerosmillion 6 (1,000,000)billion 9 (1,000,000,000)trillion 12 (1,000,000,000,000)quadrillion 15 (1,000,000,000,000,000)quintillion 18 (1000,000,000,000,000,000)sextillion 21 (1,000,000,000,000,000,000,000)septillion 24 (1,000,000,000,000,000,000,000,000)octillion 27 (1,000,000,000,000,000,000,000,000,000)nonillion 30 (1,000,000,000,000,000,000,000,000,000,000)decillion 33 (1,000,000,000,000,000,000,000,000,000,000,000)
Some punters on the stock exchange must have in recent days been wondering what to
write on their cheques when dealing with large sums of money. The following table
contains large numbers up to 1 followed by 33 zeros, which should allow everyone to
come to terms with huge figures.
Name Number of Zerosmillion 6 (1,000,000)billion 9 (1,000,000,000)trillion 12 (1,000,000,000,000)quadrillion 15 (1,000,000,000,000,000)quintillion 18 (1000,000,000,000,000,000)sextillion 21 (1,000,000,000,000,000,000,000)septillion 24 (1,000,000,000,000,000,000,000,000)octillion 27 (1,000,000,000,000,000,000,000,000,000)nonillion 30 (1,000,000,000,000,000,000,000,000,000,000)decillion 33 (1,000,000,000,000,000,000,000,000,000,000,000)
Monday, November 17, 2008
Economic and Business Up-date
Economic and Business Up-date - from John Robertson
November 2008
After causing considerable difficulties for the business sector by making money transfers a lengthy and cumbersome process, the Reserve Bank of Zimbabwe has conditionally reinstated the RTGS (Real Time Gross Settlement System) process for handling payments and transfers.
As the system was said to have become subject to widespread abuse, its re-instatement is on condition that banks apply strict controls on the conduct of those using its services through the application of the Reserve Bank’s Know Your Customer disciplines.
These require each bank to submit detailed returns to the Reserve Bank on all its own activities, together with evidence that its clients’ activities have met all due diligence investigations. Failures to exercise control will place banks at risk of suspension from the RTGS system.
However, indications that the market behaviour previously found unacceptable was influenced by severe market distortions receive no attention at all in the policy review statement.
Efforts to increase daily cash withdrawals by opening additional bank accounts have prompted the Reserve Bank to suggest that accounts that cannot be fully justified will have to be closed.
Shops licensed to sell goods for foreign currency will now have to surrender only 7,5% of their sales proceeds to the Reserve Bank, instead of 15%. This change is to be with effect from Monday November 10th. For those companies that are able to raise external lines of credit, only 5% of their earnings will have to be surrendered. Banks that help to fund commercial activities by on-lending their own resources to licensed shops will be entitled to 2,5% of the shops’ gross proceeds.
In a further move towards “dollarisation”, building societies, property developers and real estate agents can now apply to be licensed as Foreign Exchange Licensed Entities, allowing them to sell houses in foreign currency. They will have to surrender 10% of their receipts to the Reserve Bank. All of these sums surrendered will be paid for at the inter-bank rate. This is currently only three trillionths of the parallel market rate, so the amounts are being treated as a form of taxation.
Another “dollarisation” move is that all banks will now be required to keep their minimum capital requirements in foreign currency, and will be required to demonstrate the adequacy of their foreign currency-denominated capital bases on an on-going basis. The minimum for commercial banks will be US$12,5 million and the minima for the other institutions will be US$10 million for merchant banks and building societies, US$7,5 million for finance and discount houses and US$2,5 million for asset management companies.
A review of other regulations has resulted in companies being permitted to withdraw cash in amounts equivalent to 120% of their previous week’s cash deposits. This concession is not expected to be of any importance as very few companies have found good reason to deposit cash in recent months.
Interest rate changes were revealed in a separate statement from the Reserve Bank, which advised that accommodation rates, the interest charged when banks borrow from the Reserve Bank, had been increased to 10 000% from 7 500% for secured borrowing and to 40 000% from 9 500% percent for unsecured borrowing. For secured lending, banking institutions will be required to lodge 30% of their security in hard cash and 25% in foreign currency. The balance would be acceptable in traditional instruments.
In an attack on indiscipline being shown in the banking sector, Governor Gono claimed that deliberate sabotage was taking place and argued that the nation had to appreciate the magnitude of the sanctions and the “mightiness of the enemies” against whom Zimbabwe was fighting a war.
Observations on the monetary policy changes & recent developments
While the restored access to RTGS transfers will place bank deposits within better reach of depositors and will ease a great many business payments procedures, the Reserve Bank Governor repetition of government’s continuing claims that sanctions are to blame for Zimbabwe’s dreadful social and economic problems shows that Zimbabwe is no nearer to finding a solution.
Sanctions claims are unhelpful for several reasons, one of which is that most of the claimed sanctions are not sanctions at all, but demonstrations of various organisations’ unwillingness to engage with countries or governments that do not keep their word or that do not observe basic civil rights. A second reason is that the removal of the sanctions that do exist will not overcome any of the country’s problems.
Deliberate misinterpretations of the nature of sanctions will no doubt reach a new level now that the World Food Programme’s efforts to raise more money to fund additional food aid for Zimbabwe have failed. As Zanu PF wants everyone to believe that sanctions can be identified as the cause of all of the country’s difficulties, the party finds it easy to twist an unfavourable response into a claim that “illegal sanctions” are being applied.
However, the party’s objectives are clear: if all the blame can be put on sanctions, then none of the blame falls on Zanu PF. Secondly, the only people who should be accused of causing the virtual collapse of Zimbabwe’s economy are those who imposed the sanctions. And best of all, the obligations to fix Zimbabwe’s problems then fall on the shoulders of those who can thus be accused of causing them.
Now that the Pan-African Parliament has joined the chorus demanding the immediate removal of the so-called “illegal sanctions” imposed on Zimbabwe “by Britain and its allies”, Zanu PF appears to believe that its claims about the existence of sanctions are now beyond dispute. They appear to think that the Pan-African Parliament confirmed this by passing a resolution last Thursday that “took cognisance of the political and economic issues that have brought about the situation in Zimbabwe”.
However, the principal fact still on the ground is that until a few months ago, all the sanctions in force were imposed on individuals, not businesses. The people targeted had been implicated in, or linked to damaging political policies or to unacceptable human rights abuses that were sponsored and supported by government. None of the measures amounted to economic sanctions and none of them affected any private sector company’s ability to trade with any other company anywhere in the world.
Now things have changed, but not by much. A few specific economic sanctions were imposed earlier this year when deliveries of paper for printing Zimbabwean bank notes were suspended and payments for mineral exports were no longer permitted if the payments had to be made to the government’s Mineral Marketing Corporation.
The Pan-African Parliament resolution was passed after it had listened to a “comprehensive report”, which was prepared by the Reserve Bank of Zimbabwe and claimed to describe the effects of the alleged sanctions on ordinary people. This account was delivered at the 10th Ordinary Session of the PAP last week and this led to a strong condemnation of the sanctions imposed on Zimbabwe.
According to RBZ document, undeclared and declared sanctions were being felt throughout the economy and legal statutes, such as the Zimbabwe Democracy and Economic Recovery Bill, enacted by the US Government, supported some of them.
Describing the sanctions against Zimbabwe as tantamount to a declaration of war on a sovereign state, the Reserve Bank of Zimbabwe claimed they had put the economy under siege and were causing negative downstream effects on vulnerable groups and civilians. It also stated that illegal sanctions included economic, trade, financial, undeclared and arrears-triggered penalties, through the cancellation of lifeline projects, humanitarian assistance, and humanitarian infrastructural development support.
The implication of this choice of wording is that RBZ believes Zimbabwe is entitled to receive support and has every right to accuse those who fail to comply of acts of aggression. Even falling into arrears on payments should not permit lenders to withhold further loans.
The Reserve Bank’s report went on to claim that the adverse impact of the weapon of economic sanctions had resulted in deteriorating standards of living, with per capita incomes being reduced to a mockery compared to levels obtaining in those countries imposing illegal sanctions.
"Sanctions, declared or undeclared, have regrettably claimed the lives of innocent children, the disabled and physically handicapped, through denial of medical equipment, drugs, and food."
Attempts to pull such emotional strings are dishonest in the extreme. The callous indifference to the plight of the many victims of political excesses is all too evident in the ways that have been used to divert scarce resources away from areas of need to satisfy the greed and power-cravings of the political elite.
In the following page, I have tried to align brief comments against some of the other RBZ claims carried in the report to the Pan-African Parliament:
Comment:
The negative perceptions are real, but they are the result of Zimbabwe’s poor performance in servicing its existing debts. As a country, Zimbabwe has disqualified itself from access to support by failing to meet earlier repayment commitments.
Funding for infrastructural development would be readily available if lenders could be sure of being repaid. Decisions not to lend to unreliable borrowers do not amount to sanctions, but to good banking practice.
The foreign currency shortages stem from the loss of export earnings following upon the shrinkage of tobacco, horticulture, beef and other exports after the launch of the land reform programme.
The declines in key sectors were themselves caused by government policy decisions. No balance of payments support or new investment should be expected while government shows no willingness to reconsider the policies that caused the damage.
The government is wholly responsible for the decline in economic activity as it forced the closure of Zimbabwe’s major industrial sector. The sanctions against individual Zanu-PF members made no difference to business volumes.
The efforts to resolve the economic and political issues depend upon the revision of the political and economic policy choices, not on the provision of material and financial support. Such support would do no more than partly make up for the losses caused by the adoption of inappropriate policies, but would cure nothing. Reserve Bank of Zimbabwe claims:
"The imposition of targeted sanctions has precipitated negative perceptions about Zimbabwe by the world at large. These negative perceptions make it difficult for the private and public enterprises to secure funding, as donor funding agencies are no longer willing to support projects in Zimbabwe," the RBZ said.
"Significant progress that the country had made in the development of infrastructure, health and social service delivery systems has been severely affected by the imposition of sanctions.
"The protracted foreign currency shortages that the country has been facing since 2000 have crippled the operations of industry, which heavily relies on imported inputs for daily operations.
"Declines in the key sectors of the economy have occasioned high unemployment, an inefficient health delivery system, reduction in foreign direct investment and the drying-up of balance of payments support.
"Sanctions are partly responsible for the decline in economic activity over the last seven years," the RBZ outlined to the session.
The Session also urged the international community and humanitarian agencies to provide material and financial support towards ameliorating the deteriorating situation while efforts to resolve economic and political issues continue.
November 2008
After causing considerable difficulties for the business sector by making money transfers a lengthy and cumbersome process, the Reserve Bank of Zimbabwe has conditionally reinstated the RTGS (Real Time Gross Settlement System) process for handling payments and transfers.
As the system was said to have become subject to widespread abuse, its re-instatement is on condition that banks apply strict controls on the conduct of those using its services through the application of the Reserve Bank’s Know Your Customer disciplines.
These require each bank to submit detailed returns to the Reserve Bank on all its own activities, together with evidence that its clients’ activities have met all due diligence investigations. Failures to exercise control will place banks at risk of suspension from the RTGS system.
However, indications that the market behaviour previously found unacceptable was influenced by severe market distortions receive no attention at all in the policy review statement.
Efforts to increase daily cash withdrawals by opening additional bank accounts have prompted the Reserve Bank to suggest that accounts that cannot be fully justified will have to be closed.
Shops licensed to sell goods for foreign currency will now have to surrender only 7,5% of their sales proceeds to the Reserve Bank, instead of 15%. This change is to be with effect from Monday November 10th. For those companies that are able to raise external lines of credit, only 5% of their earnings will have to be surrendered. Banks that help to fund commercial activities by on-lending their own resources to licensed shops will be entitled to 2,5% of the shops’ gross proceeds.
In a further move towards “dollarisation”, building societies, property developers and real estate agents can now apply to be licensed as Foreign Exchange Licensed Entities, allowing them to sell houses in foreign currency. They will have to surrender 10% of their receipts to the Reserve Bank. All of these sums surrendered will be paid for at the inter-bank rate. This is currently only three trillionths of the parallel market rate, so the amounts are being treated as a form of taxation.
Another “dollarisation” move is that all banks will now be required to keep their minimum capital requirements in foreign currency, and will be required to demonstrate the adequacy of their foreign currency-denominated capital bases on an on-going basis. The minimum for commercial banks will be US$12,5 million and the minima for the other institutions will be US$10 million for merchant banks and building societies, US$7,5 million for finance and discount houses and US$2,5 million for asset management companies.
A review of other regulations has resulted in companies being permitted to withdraw cash in amounts equivalent to 120% of their previous week’s cash deposits. This concession is not expected to be of any importance as very few companies have found good reason to deposit cash in recent months.
Interest rate changes were revealed in a separate statement from the Reserve Bank, which advised that accommodation rates, the interest charged when banks borrow from the Reserve Bank, had been increased to 10 000% from 7 500% for secured borrowing and to 40 000% from 9 500% percent for unsecured borrowing. For secured lending, banking institutions will be required to lodge 30% of their security in hard cash and 25% in foreign currency. The balance would be acceptable in traditional instruments.
In an attack on indiscipline being shown in the banking sector, Governor Gono claimed that deliberate sabotage was taking place and argued that the nation had to appreciate the magnitude of the sanctions and the “mightiness of the enemies” against whom Zimbabwe was fighting a war.
Observations on the monetary policy changes & recent developments
While the restored access to RTGS transfers will place bank deposits within better reach of depositors and will ease a great many business payments procedures, the Reserve Bank Governor repetition of government’s continuing claims that sanctions are to blame for Zimbabwe’s dreadful social and economic problems shows that Zimbabwe is no nearer to finding a solution.
Sanctions claims are unhelpful for several reasons, one of which is that most of the claimed sanctions are not sanctions at all, but demonstrations of various organisations’ unwillingness to engage with countries or governments that do not keep their word or that do not observe basic civil rights. A second reason is that the removal of the sanctions that do exist will not overcome any of the country’s problems.
Deliberate misinterpretations of the nature of sanctions will no doubt reach a new level now that the World Food Programme’s efforts to raise more money to fund additional food aid for Zimbabwe have failed. As Zanu PF wants everyone to believe that sanctions can be identified as the cause of all of the country’s difficulties, the party finds it easy to twist an unfavourable response into a claim that “illegal sanctions” are being applied.
However, the party’s objectives are clear: if all the blame can be put on sanctions, then none of the blame falls on Zanu PF. Secondly, the only people who should be accused of causing the virtual collapse of Zimbabwe’s economy are those who imposed the sanctions. And best of all, the obligations to fix Zimbabwe’s problems then fall on the shoulders of those who can thus be accused of causing them.
Now that the Pan-African Parliament has joined the chorus demanding the immediate removal of the so-called “illegal sanctions” imposed on Zimbabwe “by Britain and its allies”, Zanu PF appears to believe that its claims about the existence of sanctions are now beyond dispute. They appear to think that the Pan-African Parliament confirmed this by passing a resolution last Thursday that “took cognisance of the political and economic issues that have brought about the situation in Zimbabwe”.
However, the principal fact still on the ground is that until a few months ago, all the sanctions in force were imposed on individuals, not businesses. The people targeted had been implicated in, or linked to damaging political policies or to unacceptable human rights abuses that were sponsored and supported by government. None of the measures amounted to economic sanctions and none of them affected any private sector company’s ability to trade with any other company anywhere in the world.
Now things have changed, but not by much. A few specific economic sanctions were imposed earlier this year when deliveries of paper for printing Zimbabwean bank notes were suspended and payments for mineral exports were no longer permitted if the payments had to be made to the government’s Mineral Marketing Corporation.
The Pan-African Parliament resolution was passed after it had listened to a “comprehensive report”, which was prepared by the Reserve Bank of Zimbabwe and claimed to describe the effects of the alleged sanctions on ordinary people. This account was delivered at the 10th Ordinary Session of the PAP last week and this led to a strong condemnation of the sanctions imposed on Zimbabwe.
According to RBZ document, undeclared and declared sanctions were being felt throughout the economy and legal statutes, such as the Zimbabwe Democracy and Economic Recovery Bill, enacted by the US Government, supported some of them.
Describing the sanctions against Zimbabwe as tantamount to a declaration of war on a sovereign state, the Reserve Bank of Zimbabwe claimed they had put the economy under siege and were causing negative downstream effects on vulnerable groups and civilians. It also stated that illegal sanctions included economic, trade, financial, undeclared and arrears-triggered penalties, through the cancellation of lifeline projects, humanitarian assistance, and humanitarian infrastructural development support.
The implication of this choice of wording is that RBZ believes Zimbabwe is entitled to receive support and has every right to accuse those who fail to comply of acts of aggression. Even falling into arrears on payments should not permit lenders to withhold further loans.
The Reserve Bank’s report went on to claim that the adverse impact of the weapon of economic sanctions had resulted in deteriorating standards of living, with per capita incomes being reduced to a mockery compared to levels obtaining in those countries imposing illegal sanctions.
"Sanctions, declared or undeclared, have regrettably claimed the lives of innocent children, the disabled and physically handicapped, through denial of medical equipment, drugs, and food."
Attempts to pull such emotional strings are dishonest in the extreme. The callous indifference to the plight of the many victims of political excesses is all too evident in the ways that have been used to divert scarce resources away from areas of need to satisfy the greed and power-cravings of the political elite.
In the following page, I have tried to align brief comments against some of the other RBZ claims carried in the report to the Pan-African Parliament:
Comment:
The negative perceptions are real, but they are the result of Zimbabwe’s poor performance in servicing its existing debts. As a country, Zimbabwe has disqualified itself from access to support by failing to meet earlier repayment commitments.
Funding for infrastructural development would be readily available if lenders could be sure of being repaid. Decisions not to lend to unreliable borrowers do not amount to sanctions, but to good banking practice.
The foreign currency shortages stem from the loss of export earnings following upon the shrinkage of tobacco, horticulture, beef and other exports after the launch of the land reform programme.
The declines in key sectors were themselves caused by government policy decisions. No balance of payments support or new investment should be expected while government shows no willingness to reconsider the policies that caused the damage.
The government is wholly responsible for the decline in economic activity as it forced the closure of Zimbabwe’s major industrial sector. The sanctions against individual Zanu-PF members made no difference to business volumes.
The efforts to resolve the economic and political issues depend upon the revision of the political and economic policy choices, not on the provision of material and financial support. Such support would do no more than partly make up for the losses caused by the adoption of inappropriate policies, but would cure nothing. Reserve Bank of Zimbabwe claims:
"The imposition of targeted sanctions has precipitated negative perceptions about Zimbabwe by the world at large. These negative perceptions make it difficult for the private and public enterprises to secure funding, as donor funding agencies are no longer willing to support projects in Zimbabwe," the RBZ said.
"Significant progress that the country had made in the development of infrastructure, health and social service delivery systems has been severely affected by the imposition of sanctions.
"The protracted foreign currency shortages that the country has been facing since 2000 have crippled the operations of industry, which heavily relies on imported inputs for daily operations.
"Declines in the key sectors of the economy have occasioned high unemployment, an inefficient health delivery system, reduction in foreign direct investment and the drying-up of balance of payments support.
"Sanctions are partly responsible for the decline in economic activity over the last seven years," the RBZ outlined to the session.
The Session also urged the international community and humanitarian agencies to provide material and financial support towards ameliorating the deteriorating situation while efforts to resolve economic and political issues continue.
Bank transfers now allowed in Zimbabwe
Just in case you hadn't heard - RTGs are back but cheques and credit cards are useless!
Harare - A month after he suspended the payment system, Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono has decided to permit bank transfers to ease demand for cash, state media reported on Thursday. Zimbabwe is experiencing an acute shortage of cash, among other basics, including food and fuel. The situation has forced people to resort to using plastic money for transactions. Foreign currency dealers use bank transfers to trade near-worthless Zimbabwe dollars for hard currency, because they cannot obtain enough cash for cash transactions. Gono told the state-controlled daily The Herald his suspension of bank transfers in October was prompted by the "widespread abuse by a breed of selfish and unrelenting money launderers and speculators". Gono attributes the cash shortages to "high levels of indiscipline in the economy" and again blamed Western sanctions for Zimbabwe's economic nosedive. Analysts rubbish that theory, pointing out that the European Union and United States sanctions target only President Robert Mugabe and his senior officials and cronies, through asset freezes and travel bans, and not the general population. - Sapa-dpa
Harare - A month after he suspended the payment system, Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono has decided to permit bank transfers to ease demand for cash, state media reported on Thursday. Zimbabwe is experiencing an acute shortage of cash, among other basics, including food and fuel. The situation has forced people to resort to using plastic money for transactions. Foreign currency dealers use bank transfers to trade near-worthless Zimbabwe dollars for hard currency, because they cannot obtain enough cash for cash transactions. Gono told the state-controlled daily The Herald his suspension of bank transfers in October was prompted by the "widespread abuse by a breed of selfish and unrelenting money launderers and speculators". Gono attributes the cash shortages to "high levels of indiscipline in the economy" and again blamed Western sanctions for Zimbabwe's economic nosedive. Analysts rubbish that theory, pointing out that the European Union and United States sanctions target only President Robert Mugabe and his senior officials and cronies, through asset freezes and travel bans, and not the general population. - Sapa-dpa
Zimbabwe Reserve Bank to People: "Financial Crisis Is Your Fault"?
We have heard this from him on and off for the last few months - nothing is ever his fault - just ours!- OL Comment
Zimbabwe Reserve Bank to People: "Financial Crisis Is Your Fault"?
by AlvarezGalloso November 16, 2008 at 01:49 pm 87 views 6 comments 37 recommendations
by reno_fog
According to the ticker from FOX News, The Governor of the Reserve Bank Of Zimbabwe Gideon Gono blamed the people of Zimbabwe for the present economic mess. Mr. Gono also challenged the people of Zimbabwe to participate in the economic reconstruction of Zimbabwe.
While this is coming from the ticker of FOX News, the underwriter is attempting to check as to the veracity of this report. He is also inviting others to contribute to this story if it indeed has ocurred.
If FOX News is right about this news segment, it would be the equivalent of Marie Antoinette telling the French People [who lcaked food at the time of the beginning of the French Revolution] to "eat cake".
It would also be the equivalent of when Elena Ceaucescu [wife of Romanian Dictator Nicolae Ceaucescu] told the same thing to the Romanian People in 1989.
Zimbabwe Reserve Bank to People: "Financial Crisis Is Your Fault"?
by AlvarezGalloso November 16, 2008 at 01:49 pm 87 views 6 comments 37 recommendations
by reno_fog
According to the ticker from FOX News, The Governor of the Reserve Bank Of Zimbabwe Gideon Gono blamed the people of Zimbabwe for the present economic mess. Mr. Gono also challenged the people of Zimbabwe to participate in the economic reconstruction of Zimbabwe.
While this is coming from the ticker of FOX News, the underwriter is attempting to check as to the veracity of this report. He is also inviting others to contribute to this story if it indeed has ocurred.
If FOX News is right about this news segment, it would be the equivalent of Marie Antoinette telling the French People [who lcaked food at the time of the beginning of the French Revolution] to "eat cake".
It would also be the equivalent of when Elena Ceaucescu [wife of Romanian Dictator Nicolae Ceaucescu] told the same thing to the Romanian People in 1989.
Wednesday, November 12, 2008
Zimbabwe attempts to alleviate inflation crisis
From Omnibus - 12 November 2008
Matt Webber
Issue date: 11/12/08 Section: News
The Zimbabwe government is taking steps to solve the devastating inflation problem that has capsized the country's economy.
Recently, there have been two attempts to revalue the Zimbabwe dollar, though neither attempt was significantly effective.
Last week, the government declared that it will introduce Z$100,000, Z$500,000 and Z$1 million in an attempt to help citizens make basic purchases.
Zimbabwe has also started allowing currencies from other countries to be used instead of the virtually worthless Zimbabwe dollar.
"In the measures under way, the Reserve Bank [of Zimbabwe] plans to introduce a number of new, higher denominations; review the cash withdrawal limits, as well as commence aggressive campaigns for increased usage of alternative means of payment," said bank governor Gideon Gono.
The inflation rate is 230 million percent, the highest in the world, according to CNN.
The value of the Zimbabwe dollar makes the cost of one loaf of bread about $1.6 trillion.
The new and larger currency will make it possible to make purchases that were impossible with the old and smaller currency.
This new plan is projected to work better than previous efforts to repair the once strong Zimbabwean economy.
The revaluing attempts in the last two months removed the excessive zeros from the prices.
In mid-October, 10 zeros were removed in currency, changing $10 billion to $1.
The attempts did not work because marketers were wary of the change and would not lower their prices by billions of dollars simply because of a government decree.
The police force under President Mugabe was sent to markets and used intimidation and violence to force marketers to lower their prices.
The lower prices that were required of marketers led many to go out of business, driving prices of goods even higher.
The ambiguity of the value of the dollar has also led to a fairly dominant black market in Zimbabwe, which cannot be taxed by the unstable government. The final aspect of the problems in Zimbabwe is the divided government.
President Mugabe has blamed other countries, poor management of Zimbabwe businesses, and fleeing Zimbabweans for the economic problems in the country.
Mugabe has been accused by opposing party leader Morgan Tsvangirai of using police intimidation to sway polls.
Matt Webber
Issue date: 11/12/08 Section: News
The Zimbabwe government is taking steps to solve the devastating inflation problem that has capsized the country's economy.
Recently, there have been two attempts to revalue the Zimbabwe dollar, though neither attempt was significantly effective.
Last week, the government declared that it will introduce Z$100,000, Z$500,000 and Z$1 million in an attempt to help citizens make basic purchases.
Zimbabwe has also started allowing currencies from other countries to be used instead of the virtually worthless Zimbabwe dollar.
"In the measures under way, the Reserve Bank [of Zimbabwe] plans to introduce a number of new, higher denominations; review the cash withdrawal limits, as well as commence aggressive campaigns for increased usage of alternative means of payment," said bank governor Gideon Gono.
The inflation rate is 230 million percent, the highest in the world, according to CNN.
The value of the Zimbabwe dollar makes the cost of one loaf of bread about $1.6 trillion.
The new and larger currency will make it possible to make purchases that were impossible with the old and smaller currency.
This new plan is projected to work better than previous efforts to repair the once strong Zimbabwean economy.
The revaluing attempts in the last two months removed the excessive zeros from the prices.
In mid-October, 10 zeros were removed in currency, changing $10 billion to $1.
The attempts did not work because marketers were wary of the change and would not lower their prices by billions of dollars simply because of a government decree.
The police force under President Mugabe was sent to markets and used intimidation and violence to force marketers to lower their prices.
The lower prices that were required of marketers led many to go out of business, driving prices of goods even higher.
The ambiguity of the value of the dollar has also led to a fairly dominant black market in Zimbabwe, which cannot be taxed by the unstable government. The final aspect of the problems in Zimbabwe is the divided government.
President Mugabe has blamed other countries, poor management of Zimbabwe businesses, and fleeing Zimbabweans for the economic problems in the country.
Mugabe has been accused by opposing party leader Morgan Tsvangirai of using police intimidation to sway polls.
Tuesday, November 11, 2008
Businesses stop accepting cheques
This is madness - one is allowed to take from the bank only 500,000 a day - a business 1 million. How can one pay in cash - it will mean people will have to queue up all day to get money - then queue to pay bills - bringing business to a standstil!
The Herald - 11 November 2008
Business Reporter
CHEQUE payments have ceased to be legal tender for most businesses, including some state enterprises, as service providers and retailers seek to beat the effects of high inflation. A survey by The Herald Business yesterday revealed that hotels, mobile telecommunications companies, some state-run organisations, manufacturers, retailers among other businesses are now insisting on cash payments or the US dollar equivalent.By default, the move effectively reduces Zimbabwe to a cash-based economy and trashes calls for use of other payment forms such as credit/debit cards, cheques and other electronic payments.The Reserve Bank of Zimbabwe has already suspended the use of electronic payments saying it fuelled speculative foreign currency dealings.In separate interviews, officials from different companies said it had become unviable for them to continue accepting cheques in light of spiraling inflation.The Central Statistical Office last reported the annual inflation rate for July at 231 million percent. Independent economists believe it has risen much faster ever since."We have stopped accepting cheques because of high inflation. The value of a dollar today will not be the same tomorrow," said a manager with a local hotel in apparent reference to the period, which a cheque takes to clear. It clears after four days.Last week, Zesa Holdings announced only cash was required for bill settlements. Subscribers of Econet and NetOne will also have to pay for all services in cash.Fashion retailer, House of Kumali is still accepting cheques although the prices are notoriously exorbitant.However, some observers have noted that companies needed cash to buy foreign currency on the black market."What will they do with the cash?" asked one observer."The money will never find its way to the bank. It will be used to buy foreign currency on the parallel market."This is the whole idea why they are insisting on cash payments."A banker, with a leading commercial bank said such developments will make life harder for individuals and corporates who are not getting enough cash from banks.Individuals are allowed to withdraw a maximum of $500 000 while the corporate limit sits at $1 million."With the small amount that people are allowed to withdraw from banks, cheque payments will create convenience," said the banker. The Reserve Bank of Zimbabwe has raised withdrawal limits nearly 10 times but cash shortages persist.
The Herald - 11 November 2008
Business Reporter
CHEQUE payments have ceased to be legal tender for most businesses, including some state enterprises, as service providers and retailers seek to beat the effects of high inflation. A survey by The Herald Business yesterday revealed that hotels, mobile telecommunications companies, some state-run organisations, manufacturers, retailers among other businesses are now insisting on cash payments or the US dollar equivalent.By default, the move effectively reduces Zimbabwe to a cash-based economy and trashes calls for use of other payment forms such as credit/debit cards, cheques and other electronic payments.The Reserve Bank of Zimbabwe has already suspended the use of electronic payments saying it fuelled speculative foreign currency dealings.In separate interviews, officials from different companies said it had become unviable for them to continue accepting cheques in light of spiraling inflation.The Central Statistical Office last reported the annual inflation rate for July at 231 million percent. Independent economists believe it has risen much faster ever since."We have stopped accepting cheques because of high inflation. The value of a dollar today will not be the same tomorrow," said a manager with a local hotel in apparent reference to the period, which a cheque takes to clear. It clears after four days.Last week, Zesa Holdings announced only cash was required for bill settlements. Subscribers of Econet and NetOne will also have to pay for all services in cash.Fashion retailer, House of Kumali is still accepting cheques although the prices are notoriously exorbitant.However, some observers have noted that companies needed cash to buy foreign currency on the black market."What will they do with the cash?" asked one observer."The money will never find its way to the bank. It will be used to buy foreign currency on the parallel market."This is the whole idea why they are insisting on cash payments."A banker, with a leading commercial bank said such developments will make life harder for individuals and corporates who are not getting enough cash from banks.Individuals are allowed to withdraw a maximum of $500 000 while the corporate limit sits at $1 million."With the small amount that people are allowed to withdraw from banks, cheque payments will create convenience," said the banker. The Reserve Bank of Zimbabwe has raised withdrawal limits nearly 10 times but cash shortages persist.
Tuesday, November 4, 2008
RBZ introduces three higher denominations
November 3, 2008 - http://www.thezimbabwetimes.com/?p=6744
By Our Correspondent
HARARE - The Reserve Bank of Zimbabwe has introduced new $1 million, $500 000 and $100 000 banknotes in a desperate bid to ease the recurrent cash shortages plaguing the inflation-ravaged economy.
The bills will officially come into circulation on Friday, although they were already on the foreign currency dealers market today.
As high as they are, though, the highest bill can only buy eight loaves of bread. The highest new note is equal to just US$6.
The new notes with be the 22nd, 23rd and 24th notes introduced by the Reserve Bank this year alone. The central bank also said it will review cash withdrawal limits to compensate for ever-accelerating inflation.
The withdrawal limit for individuals is still $50 000 a day while that for companies is $10 000.
In a statement last night, the central bank said: “In a market that has become predominantly speculative, most providers of goods and services are demanding cash as the only acceptable means of payment, penalising those that could otherwise be willing and able to use cheques for transaction purposes.
“In the measures underway, the Reserve Bank plans to introduce a number of new, higher denominations, review the cash withdrawal limits as well as commence aggressive campaigns for increased usage of other alternative means of payment.”
“The RBZ is fighting a losing battle,” economist John Robertson said in Harare.
“As long as the inflation remains high, cash shortages will persist. There is need to address the inflation by increasing production so that too goods do not (cost) a lot of money.”
Signs of a severe cash shortage are showing across the country as citizens are currently struggling to access cash from their various bank and financial institutions’ accounts.
A serious cash shortage has persisted since October 2007. The latest negative developments follow the move by German firm, Giesecke and Devrient, to half money paper supplies to Zimbabwe.
Long bank queues are once again part of everyday life in which the maximum withdrawal limit, which people say is too little, forces them to come back to the bank virtually daily. Bank sources hint the cash situation is poised to deteriorate further in the coming weeks.
“Right now, we have a situation whereby the country has no paper coming in, so the money that is currently circulating was printed some time back.”
“Due to the hyper-inflationary environment, there is an urgent need for more new notes, and this is the problem faced by the RBZ,” said an economist with a local bank.
The Munich-based firm, which supplied the RBZ with paper for bearer cheques, was asked by the German government to halt business with Zimbabwe because of concerns it was helping prop up Zimbabwe’s President Robert Mugabe.
In the capital city of Harare, long queues are a daily feature at every bank, but the longest queues can be seen at CABS, Beverley and the POSB.
People wake up to join queues as early as 5am, as long queues can be seen by 6am.
By Our Correspondent
HARARE - The Reserve Bank of Zimbabwe has introduced new $1 million, $500 000 and $100 000 banknotes in a desperate bid to ease the recurrent cash shortages plaguing the inflation-ravaged economy.
The bills will officially come into circulation on Friday, although they were already on the foreign currency dealers market today.
As high as they are, though, the highest bill can only buy eight loaves of bread. The highest new note is equal to just US$6.
The new notes with be the 22nd, 23rd and 24th notes introduced by the Reserve Bank this year alone. The central bank also said it will review cash withdrawal limits to compensate for ever-accelerating inflation.
The withdrawal limit for individuals is still $50 000 a day while that for companies is $10 000.
In a statement last night, the central bank said: “In a market that has become predominantly speculative, most providers of goods and services are demanding cash as the only acceptable means of payment, penalising those that could otherwise be willing and able to use cheques for transaction purposes.
“In the measures underway, the Reserve Bank plans to introduce a number of new, higher denominations, review the cash withdrawal limits as well as commence aggressive campaigns for increased usage of other alternative means of payment.”
“The RBZ is fighting a losing battle,” economist John Robertson said in Harare.
“As long as the inflation remains high, cash shortages will persist. There is need to address the inflation by increasing production so that too goods do not (cost) a lot of money.”
Signs of a severe cash shortage are showing across the country as citizens are currently struggling to access cash from their various bank and financial institutions’ accounts.
A serious cash shortage has persisted since October 2007. The latest negative developments follow the move by German firm, Giesecke and Devrient, to half money paper supplies to Zimbabwe.
Long bank queues are once again part of everyday life in which the maximum withdrawal limit, which people say is too little, forces them to come back to the bank virtually daily. Bank sources hint the cash situation is poised to deteriorate further in the coming weeks.
“Right now, we have a situation whereby the country has no paper coming in, so the money that is currently circulating was printed some time back.”
“Due to the hyper-inflationary environment, there is an urgent need for more new notes, and this is the problem faced by the RBZ,” said an economist with a local bank.
The Munich-based firm, which supplied the RBZ with paper for bearer cheques, was asked by the German government to halt business with Zimbabwe because of concerns it was helping prop up Zimbabwe’s President Robert Mugabe.
In the capital city of Harare, long queues are a daily feature at every bank, but the longest queues can be seen at CABS, Beverley and the POSB.
People wake up to join queues as early as 5am, as long queues can be seen by 6am.
Zimbabwean Gold Mines Unable to Operate, Chamber of Mines Says
This just has to go on this page - dreadful news!
Zimbabwean Gold Mines Unable to Operate, Chamber of Mines Says
By Brian Latham
Nov. 4 (Bloomberg) -- Most gold mines in Zimbabwe are unable to operate because the country's central bank hasn't paid them for deliveries of the metal, the country's Chamber of Mines said.
Several mines have been flooded while others are unable to pay workers because payments for gold have been erratic or non- existent for as long as two years, the Harare-based Chamber, which represents the country's bigger gold mines, said in an e- mailed statement late yesterday.
``It is not understandable that at a time when the country requires as much foreign currency as possible, the gold sector, which can generate foreign currency, has deliberately been brought to its knees,'' the Chamber said.
Before Robert Mugabe's government began seizing white-owned commercial farms in 2000, slashing export income and pushing the economy into a recession, gold competed with tobacco as Zimbabwe's biggest export. The country then ranked third in Africa with respect to production of the metal after South Africa and Ghana. It has now been superseded by Tanzania and Mali.
Zimbabwe now has an annual inflation rate of 231 million percent and can't afford adequate supplies of fuel, power and food.
Exploration for new gold deposits has ``completely ceased'', while underground water has flooded several mines that can't afford to repair pumps that normally work 24 hours a day to keep mine shafts dry, the Chamber said.
Fidelity Printers and Refiners Ltd., a unit of the Reserve Bank of Zimbabwe, has a monopoly on all bullion trade in the southern African nation. Calls to Zimbabwe's central bank weren't answered today.
Zimbabwe may produce as little as four metric tons of gold this year, down from seven tons last year, the Chamber said in June. Power and foreign currency shortages, as well as an exodus of skilled manpower, have worsened Zimbabwe's mining crisis, the industry group said at the time.
Gold mining companies in Zimbabwe include RioZim Ltd. and Metallon Corp.
To contact the reporter on this story: Brian Latham via the Johannesburg bureau on pmrichardson@bloomberg.net Last Updated: November 4, 2008 04:02 EST
Zimbabwean Gold Mines Unable to Operate, Chamber of Mines Says
By Brian Latham
Nov. 4 (Bloomberg) -- Most gold mines in Zimbabwe are unable to operate because the country's central bank hasn't paid them for deliveries of the metal, the country's Chamber of Mines said.
Several mines have been flooded while others are unable to pay workers because payments for gold have been erratic or non- existent for as long as two years, the Harare-based Chamber, which represents the country's bigger gold mines, said in an e- mailed statement late yesterday.
``It is not understandable that at a time when the country requires as much foreign currency as possible, the gold sector, which can generate foreign currency, has deliberately been brought to its knees,'' the Chamber said.
Before Robert Mugabe's government began seizing white-owned commercial farms in 2000, slashing export income and pushing the economy into a recession, gold competed with tobacco as Zimbabwe's biggest export. The country then ranked third in Africa with respect to production of the metal after South Africa and Ghana. It has now been superseded by Tanzania and Mali.
Zimbabwe now has an annual inflation rate of 231 million percent and can't afford adequate supplies of fuel, power and food.
Exploration for new gold deposits has ``completely ceased'', while underground water has flooded several mines that can't afford to repair pumps that normally work 24 hours a day to keep mine shafts dry, the Chamber said.
Fidelity Printers and Refiners Ltd., a unit of the Reserve Bank of Zimbabwe, has a monopoly on all bullion trade in the southern African nation. Calls to Zimbabwe's central bank weren't answered today.
Zimbabwe may produce as little as four metric tons of gold this year, down from seven tons last year, the Chamber said in June. Power and foreign currency shortages, as well as an exodus of skilled manpower, have worsened Zimbabwe's mining crisis, the industry group said at the time.
Gold mining companies in Zimbabwe include RioZim Ltd. and Metallon Corp.
To contact the reporter on this story: Brian Latham via the Johannesburg bureau on pmrichardson@bloomberg.net Last Updated: November 4, 2008 04:02 EST
Saturday, November 1, 2008
New Hyperinflation Index (HHIZ) Puts Zimbabwe Inflation at 10.2 Quadrillion Percent
bySteve H. Hanke*Professor of Applied Economics The Johns Hopkins University and Senior Fellow The Cato Institute
Comment - this follows up on John Robertson's report.
Zimbabwe is the first country in the 21st century to hyperinflate. In February 2007, Zimbabwe’s inflation rate topped 50% per month, the minimum rate required to qualify as a hyperinflation (50% per month is equal to a 12,875% per year). Since then, inflation has soared. The last official inflation data were released for July and are hopelessly outdated. The Reserve Bank of Zimbabwe has been even less forthcoming with money supply data: the most recent money supply figures are ancient history—January 2008. Absent current official money supply and inflation data, it is difficult to quantify the depth and breadth of the still-growing crisis in Zimbabwe. To overcome this problem, Cato Senior Fellow Steve Hanke has developed the Hanke Hyperinflation Index for Zimbabwe (HHIZ). This new metric is derived from market-based price data and is presented in the accompanying table for the January 2007 to present period. As of 24 October 2008, Zimbabwe’s annual inflation rate was 10.2 Quadrillion (1015) percent.The HHIZ will be updated weekly and available on the Cato Institute’s web site. www.cato.org/zimbabwe (chart of inflation here)*
Steve H. Hanke is one of the world’s leading experts on exchange-rate regimes. He has played a prominent role in designing and implementing monetary reforms that have stopped very high or hyperinflations in eight countries.
Comment - this follows up on John Robertson's report.
Zimbabwe is the first country in the 21st century to hyperinflate. In February 2007, Zimbabwe’s inflation rate topped 50% per month, the minimum rate required to qualify as a hyperinflation (50% per month is equal to a 12,875% per year). Since then, inflation has soared. The last official inflation data were released for July and are hopelessly outdated. The Reserve Bank of Zimbabwe has been even less forthcoming with money supply data: the most recent money supply figures are ancient history—January 2008. Absent current official money supply and inflation data, it is difficult to quantify the depth and breadth of the still-growing crisis in Zimbabwe. To overcome this problem, Cato Senior Fellow Steve Hanke has developed the Hanke Hyperinflation Index for Zimbabwe (HHIZ). This new metric is derived from market-based price data and is presented in the accompanying table for the January 2007 to present period. As of 24 October 2008, Zimbabwe’s annual inflation rate was 10.2 Quadrillion (1015) percent.The HHIZ will be updated weekly and available on the Cato Institute’s web site. www.cato.org/zimbabwe (chart of inflation here)*
Steve H. Hanke is one of the world’s leading experts on exchange-rate regimes. He has played a prominent role in designing and implementing monetary reforms that have stopped very high or hyperinflations in eight countries.
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