Lack of Cash Now a Major Issue in Zimbabwe - 2003-05-23

A new item has joined the long list of things that are in short supply in Zimbabwe: cash. People and banks are trying to cope with the situation.

Faced with a shortage of currency supplied by the Central Bank, local banks in Zimbabwe are limiting the amounts clients can withdraw from their accounts over the counter and from automated tellers machines. They are also asking large companies to stagger their withdrawals for salary payments through the week to avoid huge withdrawals on any one day.

In addition, the banks would like the Central Bank to print more money, and the Central Bank itself would like to print larger denominations. But officials say the government does not have the foreign currency to import the paper used to print the local currency.

An economist with a local bank says printing more money is not the solution. The economist, Witness Chinyama, says the cause of the increased demand on cash is the runaway inflation, and it is a principle of economics that more cash would just cause more inflation.

Banks have been experiencing the cash shortage for some weeks now but the problem worsened after last month's three-day general strike. The Zimbabwe Congress of Trade Unions called the strike to force the government to reverse a hefty fuel price hike.

Local banks closed during the strike and when they re-opened, there were long lines of people wanting to withdraw their money.

Now, the Trade Unions are planning another strike in mid-June, and they have urged people to stock up on food and cash to be ready. The result is that many people are keeping large sums of money at home, to be sure they don't run out.

The shortage of cash is particularly bad for Zimbabweans faced with inflation of more than 260 percent. People need large amounts of cash to pay their bills. And with the largest Zimbabwe dollar note worth just 30 U.S. cents at the black market rate, people often need bags and bags full of money.