Cash crisis worsens

The effects of the cash shortage crisis in Zimbabwe are being felt in all spheres of society and everyone from ordinary citizens to the security services and parliamentarians has voiced their disquiet over the situation. Soldiers recently trashed a bank because it ran out of notes, President Robert Mugabe used special presidential powers to pass a new law limiting the amount of hard currency individuals can carry, and parliament has told the Reserve Bank management to quit over the currency shortages. The cash squeeze has seen productivity drop, as many workers now spend a large part of their time in winding queues outside banks and building societies, hoping to withdraw money. Over the weekend, Mugabe used his presidential powers to enact the "Promotion of Banking Transactions, Statutory Instrument 171 of 2003", which makes it an offence to hoard money. News reports said four unnamed people became the first victims of the government's new ban on "hoarding cash" when they were arrested on Monday. Many Zimbabweans have been keeping money at home because banks are limiting individual withdrawals to a maximum of Zim $5,000, slightly over US $5. According to the new law: "It will be a criminal offence for any individual to be in possession of cash exceeding $5 million [about US $6,000] at any time." As of Sunday, 24 August, police are authorised to seize from individuals amounts exceeding Zim $5 million. "Once seized, this cash will be held for safe-keeping in trust accounts, to be opened by the Reserve Bank in various banks across the country. Its release or forfeiture to the state will generally rest with the state," reads part of the law. Analysts said the new law was not likely to result in an increased availability of cash, as numerous other measures to arrest the trade in currency had not improved the situation. Only last week the Reserve Bank of Zimbabwe introduced internal traveller's cheques in denominations of $1,000, $5,000, $20,000, $50,000 and $100,000. However, many sectors of the economy refuse to accept the traveller's cheques as legal tender. TEMPERATURE RISING The ongoing cash crunch is starting to cause disgruntlement across the country. On Saturday, close to 50 angry members of the Zimbabwe National Army stormed the Beverley Building Society in Chitungwiza Town, about 35 km outside the capital, Harare. According to shocked bank tellers, the soldiers threatened them and broke some glass panels after they were told the bank had run out of money. They left only after the bank's management intervened and assured them that there really were no notes available. Meanwhile, the official Herald newspaper reported that the Zimbabwe parliament had urged the management of the Reserve Bank to resign. There were calls for the "complete overhaul of the central bank ... following its failure to arrest the cash crisis, reduce inflation and curb the foreign currency parallel market", the paper reported. It said the cash shortage had compounded Zimbabwe's economic problems. Zimbabwe's runaway inflation rate hit 399.5 percent in July this year, putting prices at five times their level of a year ago, according to official figures released on Tuesday, the South African Press Association reported. The rate, announced by the Central Statistics Department, meant prices had doubled in the past five months.