Obsolete coins cause chaos at Zimbabwe tills

[August 02, 2008]  HARARE, Zimbabwe (AP) -- Zimbabweans dug out coins squirreled away years ago in jars and cupboards and headed for the shops, where lines built up as overburdened tellers more accustomed to counting mounds of hyper-inflated dollar notes instead were juggling silver.

The central bank, overwhelmed by stratospheric inflation, this week cut 10 zeros from the currency and reintroduced coins made obsolete in 2002 when they became worthless.

A $1 coin now is worth 10 billion of the old dollars.

On Friday, about 20 $1-coins - or 200 billion Zimbabwe dollars - could buy a loaf of scarce bread if it could be found in a downtown supermarket. That's about $5 at the official rate and $2 at the black market rate that better reflects the value of the currency.

"It has been a chaotic day," said Farayi Chikomba, a teller filling plastic banking bags with coins at a small supermarket at closing time. "Customers have been digging out their old coins."

Lines built up as staff counted the coins.

"It's a bonus for anyone like me who didn't know what to do with coins and didn't throw them away," said businessman Frank Takavara, who carried a cookie jar full that bought him a small sachet of powdered milk.

Chikomba said he received a few new $10 and $20 notes issued by banks Friday. But most purchasers still used coins, old notes or checks. The old currency remains effective until December, being used alongside new bills in the "revalued" currency rate introduced Friday.

The biggest new bill is $500, equivalent to 5 trillion in the old denominations. Two weeks ago, the bank had introduced a $100 billion-dollar note.

Bank executives said many branches still were waiting for deliveries of new currency from the central bank late Friday, the first day of issue.

In setting prices on its menu, a downtown cafe mistakenly slashed nine zeros from its prices instead of the required 10. Until December, prices must be quoted in both new dollars and old dollars, according to a central bank directive.

"Everyone is totally confused. Maybe things will settle down in a few days. It's farcical at the moment," said the cafe manager, who asked not to be identified for fear of repercussions.

Embattled President Robert Mugabe blamed profiteers and Western sanctions for the economic chaos in the southern African nation and this week warned that if businesses tried to cash in on the mess, he would impose a state of emergency.

There were fears he could use emergency laws to punish rivals should power-sharing talks with the opposition not resolve in his favor.

Both Mugabe and opposition leader Morgan Tsvangirai say they won elections this year. Talks being held in a secret location in South Africa under an agreed media blackout were due to resume Sunday. Mugabe has ruled since a guerrilla war forced an end to white minority rule in 1980, in recent years even overcoming opposition within his own party.

Zimbabwe's woes began when Mugabe nearly 10 years ago sent supporters to violently invade white-owned commercial farms that drove the economy, saying he was reclaiming the land for poor black peasants.

Instead, he gave the farms to his Cabinet minister, generals and other cronies. Most were left untended and today Zimbabwe, which once exported food, suffers chronic shortages of everything from food and medication to fuel and electricity.

The lines to which Zimbabweans have become accustomed also grew Friday at banks, where officials said a government notice allows checks to be written in both new and old denominations.

Central bank governor Gideon Gono said he acted this week because inflation was hampering the country's computer systems. Computers, electronic calculators and automated teller machines could not handle basic transactions in billions and trillions of dollars.

Inflation, the highest in the world, is officially running at 2.2 million percent in Zimbabwe but independent economists say it is closer to 12.5 million percent.

Analysts say the slashing of the 10 zeros and the issue of new lower denomination notes failed to address the root causes of inflation, and in real terms zeros will soon return unless inflation is slowed.

[Associated Press; By ANGUS SHAW]

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