Govt devalues currency in bid to ease forex shortages

Reserve Bank governor Gideon Gono announced the devaluation of the Zimbabwean dollar by 31 percent from Zim $6,200 to Zim $9,000 per US $1 in his quarterly review of monetary policy on Thursday. Zimbabwe's flourishing parallel market exchanges currency at rates of up to Zim $18,000 per US $1. In his statement Gono portrayed an economy that had ground to a halt, weighed down by crippling shortages and high inflation. After its recent parliamentary elections, Zimbabwe was again hit by shortages of fuel and other basic goods: electricity, water, maize, sugar, milk, eggs and margarine have all been in short supply. But while basic commodities are scarce in supermarkets, they can be found on the parallel market at inflated prices. On the eve of the governor's policy statement, long queues formed at fuel stations in urban centres as private vehicles and commuter buses waited for fuel deliveries. Tired commuters queued for hours as they waited in vain for public transport. Some opted to walk, while others with a bit of cash to spare splurged on relatively expensive taxis to get themselves home. "I made a fortune with the little fuel that I bought on the black market, because I was charging very high fees because of the scarcity of transport," Nduna Dube, a taxi driver, told IRIN. In his monetary policy announcement, Gono blamed the lack of fuel on "unscrupulous middlemen" and said government would take steps to deal with them. He also announced a programme to support the troubled agricultural industry, which has had yet another poor season. "In order to ensure maximum productivity levels, there's great scope in the country for promoting and supporting joint ventures between the new [resettled] farmers and progressive-minded former operators of horticulture ... as well as other new investors, so as to hasten the skills transfer cycle," Gono said. The Reserve Bank would also no longer allow foreign currency account holders to withdraw hard currency; only those who could prove they were travelling out of the country would be issued with travellers' cheques, and they would have to account for the money spent. Professor Eliphas Mukonoweshuro, a political scientist, described Gono's policy statement as a reflection "of the levels of desperation" in government as it attempts to ease foreign currency shortages. "The fact that the government is prepared to monitor the small amounts in foreign currency accounts of private citizens shows just how desperate they are, and how they have run out of ideas," he added.