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HARARE - Zimbabwe's central bank on Monday blamed banks for the country's cash shortages which have persisted despite the injection of new, higher denomination bank notes last week.
The shortage of bank notes, reflecting a severe economic crisis blamed on President Robert Mugabe's policies, has prompted the central bank to issue higher denomination bills to keep up with galloping inflation. Zimbabwe has the highest inflation rate in the world at nearly 8,000 per cent.
Central bank governor Gideon Gono told reporters that 98 trillion Zimbabwe dollars ($4.5 billion at the official exchange rate, $31.6 million at black market rates) in new notes had been put into circulation since mid-December.
Gono said Zimbabwe had $Z170 trillion in circulation, which would rise to $Z800 trillion by the end of the week.
On Monday Gono took the unprecedented step of opening the central bank's vaults to a group of journalists, bankers and business leaders to display huge piles of cash, which he said banks were failing to withdraw.
"Notwithstanding the high levels of cash stocks sitting at the Reserve Bank ready for dispatch into the market, some banking institutions have been engaging in imprudent and unethical practices which are creating artificial queues for cash," Gono said.
"Analysis of banks' asset-liability profiles has shown non-collection of cash from the Reserve Bank due to inability to pay for such cash on collection as they tied up depositors' funds in illiquid speculative investments."
Last week the central bank issued $Z10 million, $Z5 million and $Z1 million notes after another set of $Z750,000, $Z500,000 and $Z250,000 printed in December failed to resolve the cash shortages.
The new measures have so far failed to end long queues at banks, which Gono accuses of being unable to collect sufficient bank notes from the central bank as they had tied up depositors' funds in risky and speculative non-banking activities.
Apart from the bank note shortages, Zimbabweans have to grapple with shortages of food, foreign currency, fuel and electricity, reflecting an economic crisis blamed on Mugabe's seizure of white-held farms to resettle landless blacks.
Mugabe, 83 and in power since independence from Britain in 1980, denies running down one of the continent's most promising economies and says it has been undermined by western nations opposed to his land reforms.
- REUTERS
