Zimbabwe’s central bank has today launched a $50billion note into circulation, despite the currency being virtually worthless.
According to today’s estimates the $50billion note will trade at $1.25 US dollars on the black market and have enough purchase power to buy just two loaves of bread or three newspapers.
Three weeks previous, when the government introduced a $10billion note, the equivalent £50billion would have been worth $3.30 US dollars, illustrating the currency’s severe decline in value.
A $20billion note has also been released as part of Acting Finance Minister, Patrick Chinamasa’s bid to tackle the cash shortages currently gripping the country.
This actually represents the second issue of such high value notes after the government were forced to revalue the currency and remove 10 zeros (effectively turning Z$10billion to just Z$1) in August last year.
Poverty stricken Zimbabwe is currently struggling with an unprecedented economic crisis. Almost 80% of its population is unemployed, its currency is dropping in value by almost 100% a day and inflation is running at a staggering 231million%. As a point of comparison, the official rate of inflation in the UK, the Consumer Prices Index, currently sits at 4.1%.
Hyperinflation has become such an issue that few are trading in the nation’s official currency. US dollars and South African rand have instead been adopted as a more viable alternative.
Even the government have acknowledged the futility of the Zimbabwean economy and in September licensed over a thousand shops to sell goods in foreign currency. Everything from food to fuel, property and mobile phone credit can now be bought with non-Zimbabwean funds.
While the situation is nothing short of dire it is difficult to see how this move by Zimbabwe’s central bank will better the situation.
"I am not really sure what these notes would be for," commented Zimbabwean economist John Robertson in an interview with CNN. "No one now accepts the local currency. It is a waste of resources to print Zimbabwe dollar notes now."
Many have argued that a resolution of the country’s grid-locked government can be the only possible reprieve for the situation.
