ZIMBABWE'S central bank governor yesterday slashed ten zeros from the country's worthless currency and resuscitated old coins in a desperate attempt to halt hyperinflation.
"The Zimbabwe dollar will be redenominated by a factor of one to ten, which means we are removing ten zeros from our monetary value: $10 billion today will be reduced to $1, effective from 1 August," said Gideon Gono in a televised address.
This is the second time in two years that the Reserve Bank governor has been forced to lop zeros from the local currency as he fights record inflation, currently estimated at more than 2,000,000 per cent.
In 2006, he slashed three zeros and sent bank employees into remote rural areas to mop up old banknotes in the now infamous Operation Sunrise, which was meant to herald Zimbabwe's economic recovery.
But the sham re-election last month of Robert Mugabe has sent the Zimbabwe dollar plummeting again. With the country on a knife-edge this week as talks between Mr Mugabe's Zanu-PF and the opposition appeared to falter, the British pound changed hands for a record one trillion Zimbabwe dollars, nearly ten times the official rate.
A loaf of bread soared to $300 billion – three times a teacher's monthly salary. Calculators, computers and bank machines have been unable to cope with the extra zeros.
Dr Gono, Mr Mugabe's personal banker, announced the introduction of a $500 note. It will be worth five trillion of the old dollars. The note will not be enough to buy a tub of ice-cream. A $100 billion note was brought in last week.
The bank chief said old and new notes would co-exist until 31 December. He joked that Zimbabwe's domestic workers would be "seriously empowered" by the reintroduction of old $1 and $5 coins.
The coins were last used around eight years ago before Mr Mugabe's chaotic programme of white land seizures first sparked mounting inflation. Wealthy Zimbabweans gave the coins away years ago.
Speaking after the governor, Mr Mugabe threatened to impose a state of emergency if businesses kept hiking prices.
In a threat likely to erode what little investor confidence remains here, he said: "If you drive us more than you have done, we will impose emergency measures and we don't want to place our country in a situation of emergency rules."
Businesses have been battered by Mr Mugabe's price slash last year, which saw thousands of traders arrested. Police frequently arrest business people found charging in foreign currency, which is illegal.
This month, the regime announced that it had launched an audit of Western-owned companies ahead of the implementation of controversial black empowerment laws. Fear of the authorities has forced many businesses underground. Private warehouses sell goods such as cooking oil and margarine in hard currency only to "vetted" customers.
Dr Gono blames the crisis on "illegal" sanctions imposed by Britain and the United States. Yesterday he put on a stern face, but his address at times threatened to degenerate into farce.
Scheduled to begin at 9am, the proceedings did not kick off until 10:30am, leaving dozens of businesspeople, politicians and economists gathered at Harare's International Conference Centre plenty of time to guzzle free bottles of Mazoe Orange Juice.
After a senior official read a prayer, an embarrassed Dr Gono was forced to retire from the podium before he started his speech. He asked for "just five or ten minutes" to finish it, prompting speculation he had been ordered to make changes.
Transmission was then frequently interrupted, leaving viewers watching an advert for Japanese car engines, that was played repeatedly.
The full article contains 610 words and appears in The Scotsman newspaper.
