Central Bank Obliterates Once-Prosperous African Nation *

CNN
07.12.2008

Hyperinflation forces Zimbabwe to print $200 million notes

HARARE, Zimbabwe (CNN)  — Cash-strapped Zimbabwe revealed plans Saturday to circulate $200 million notes, just days after introducing a $100 million bill, Finance Minister Samuel Mumbengegwi said.

After the $100 million note began circulating on Thursday, the price of a loaf of bread soared from 2 million to 35 million Zimbabwean dollars.

the government also fired top executives at four major banks Thursday, according to The Herald, a state-owned newspaper.

Many anxious residents of the nation’s capital, Harare, have been sleeping outside banks, waiting for them to open so they can make withdrawals before the institutions run out of cash.

The Reserve Bank of Zimbabwe had capped maximum daily withdrawals at 500,000 Zimbabwean dollars: about 25 U.S. cents, or about a quarter of Thursday’s price of a loaf of bread.

After spending several days waiting in bank lines, soldiers rampaged through downtown Harare, destroying shops and attacking riot police sent to disperse the protesters.

Cash shortages are not the only crisis plaguing Zimbabwe.

“The [Reserve Bank of Zimbabwe] is failing to deliver the demands of market, prices are doubling daily, and that demands more cash,” Zimbabwean economist John Robertson said. “The huge price increases are resulting from severe shortages of most goods.”

The once-prosperous African nation is facing its worst economic and humanitarian crisis since attaining independence from Great Britain in 1980.

Zimbabwe’s official rate of inflation is 231 million percent,

Critics of Zimbabwean President Robert Mugabe link hyperinflation to his policies on land distribution and unbudgeted payments to war veterans.

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