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Cablegate: Govt Outlaws Large Cash Sums

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS HARARE 001635

SIPDIS

STATE FOR AF/S
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER
USDOC FOR 2037 DIEMOND
TREASURY FOR OREN WYCHE-SHAW
PASS USTR FLORIZELLE LISER
STATE PASS USAID FOR MARJORIE COPSON

E. O. 12958: N/A
TAGS: ECON EINV PGOV ZI
SUBJECT: Govt Outlaws Large Cash Sums

1. Summary: Zimbabwe's cash saga continues. The GOZ has
made it illegal for anyone to charge a premium for
banknotes or possess Z$5 million (US$1,000). End summary.

2. Meanwhile, the banknote crisis continues unabated.
Supermarkets have a higher mark-up on banknotes than on
any other product. Throngs of accountholders lining up
at banks for their Z$5,000-10,000 (US$1-2) daily
allotment are commonplace. The crisis has hit hardest
Zimbabwe's lower-class. As we've mentioned in other
reporting, the Zimbabwe Confederation of Trade Unions
(ZCTU) is weighing mass action to protest the GOZ's
mismanagement of the country's narrow money supply. The
Reserve Bank has also just introduced Zimdollar travel
checks as an alternative to money, but recipients must
still cash these single-use checks at banks, a nearly
impossible feat.

3. Comment: Making large piles and the trading of cash
illegal will do nothing to resolve the banknote shortage.
Trading will continue clandestinely. Most business
transactions here are already illegal in some respect.
In short, the GOZ is unwilling to acknowledge the
Zimdollar's plummeting value. The official press still
talks occasionally of printing a Z$1,000 (US$.20) note,
double the current Z$500 top bill, but the Reserve Bank
would need to print at least a Z$10,000 (US$1) note to
stay ahead of its rapidly depreciating currency. The
cost of printing any note under Z$10,000 is prohibitive.

Whitehead

© Scoop Media

 
 
 
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