WORLD

$50 billion buys three bread loaves

PATRICIA TREBLE July 21 2008
WORLD

$50 billion buys three bread loaves

PATRICIA TREBLE July 21 2008

$50 billion buys three bread loaves

WORLD

PATRICIA TREBLE

With an annual inflation rate of around nine million per cent, Zimbabwe is full of billionaires and trillionaires who can’t feed their families. Last week, hyperinflation forced the African nation’s central bank to quadruple the daily bank withdrawal limit to $ 100 billion, enough to buy two litres of cooking oil and a bar or two of soap. And since the government demands most workers to be paid through direct deposit, queues are a constant presence outside banks as people withdraw their depreciating money.

Since the economy collapsed in 2000 after President Robert Mugabe expropriated whiteowned farms—the core of the nation’s business sector—the government has kept itself afloat by printing Zimbabwean dollars in higher and higher denominations. Currently the largest banknote is $50 billion—which could buy three loaves of bread or a can of baked beans—and it comes with an expiry date, though the note will be worthless long before it officially loses its value. Zimbabweans have learned to adapt. The few able to afford a dinner out know to pay for everything, including drinks, at the beginning of the meal, to avoid paying higher prices at the end of the evening. And with cash registers unable to deal with so many zeroes, stores have eliminated six zeroes from their prices and then multiply the receipt price by a million.

But even this bizarre system was dealt a blow last week when the German banknote firm Giesecke & Devrient bowed to domestic and international pressure and announced it would “cease delivering banknote paper to the Reserve Bank of Zimbabwe with immediate effect.” Though central bank governor Gideon Gono vows to “innovate and try to plough around all obstacles placed in its way,” he couldn’t explain how they were going to replace the crucial specialized paper. It would seem inflation may be the one problem Robert Mugabe can’t solve through torture, murder and intimidation. M