Harare
30 July 2008
For the second time in two years, Zimbabwe's central bank is slashing zeros off its largely worthless currency. This time 10 zeros will go, making $10 billion equal to $1. Peta Thornycroft reports for VOA that Zimbabwe's political crisis has bankrupted Zimbabwe causing massive emigration with the majoity of the remaining population surviving on one meal a day.
The central bank's governor Gideon Gono chopped 10 zeros off the Zimbabwe dollar and reintroduded coins which have been obsolete for years.
The highest denomination of Zimbabwe currency is currently 100 billion.
After the currency announcement, President Robert Mugabe warned in a televised event Wednesday that he will declare a state of emergency if prices continue to rise.
Officially inflation is at 2.2 million percent, but private sector economists estimate it is at least five times higher. Prices double every few days.
The purchase of a small packet of cookies can easily cost 400 billion Zimbabwe dollars. Bread, when it is available, is about 200 billion dollars. A few every day items can cost trillions of dollars, and houses for sale are advertised in quadrillions.
Comparing costs with South African groceries, using a combination of official and black market rates, groceries in Zimbabwe are between three and four times the cost for the same goods in South Africa.
Mr. Mugabe's warnings about price increases came as South African president Thabo Mbeki arrived in Harare to mediate talks between the Movement for Democratic Change and ZANU-PF.
Mr. Mbeki will meet Mr. Mugabe, whom the opposition Movement for Democratic Change, or MDC, has accused of stealing the election earlier this year.
The MDC's Morgan Tsvangirai easily beat Mr. Mugabe in the first round of the presidential poll but withdrew from the second round because of violence against his supporters.
"We are still negotiating, we want to succeed," Mr. Mugabe said in his televised address."You find room for compromise but sometimes compromise is difficult."
Central bank governor Gono said the new currency will be launched Friday.