Zeroing in on hyper-inflation

HARARE, Zimbabwe (AP) | Zimbabwe will drop 10 zeros from its hyper-inflated currency - turning 10 billion dollars into one - the country’s reserve bank says.

Shop shelves are empty, and there are chronic shortages of everything, including medication, food, fuel, power and water. Eighty percent of the work force is unemployed, and many who do have jobs don’t earn enough to pay for bus fare.

One-third of Zimbabweans have become economic and political refugees. Another third is dependent on foreign food aid.

But President Robert Mugabe last month barred nongovernmental organizations from handing out food, claiming they were supporting the opposition.

On Wednesday, central bank Gov. Gideon Gono announced he was dropping 10 zeros from the currency, effective Friday. That comes a week after he introduced a 100-billion-dollar note that was not enough to buy a loaf of bread.

Mr. Mugabe went on television immediately after Mr. Gono’s announcement to warn against illegal money dealings and profiteering.

“Entrepreneurs across the board: Don’t drive us further,” he warned. “If you drive us even more, we will impose emergency measures.”

Mr. Gono said new money would be introduced Friday with 500-dollar bills. He also said he was reintroducing coins, which have been obsolete for years.

Mr. Gono said the high rate of inflation was hampering the country’s computer systems. Inflation is officially running at 2.2 million percent in Zimbabwe, but independent economists say it’s closer to 12.5 million percent.

Computers, electronic calculators and automated teller machines at Zimbabwe’s banks cannot handle basic transactions in billions and trillions of dollars.

Mr. Mugabe has blamed profiteering and sanctions by the United States and the European Union for Zimbabwe’s economic collapse. Critics have blamed mismanagement by Mr. Mugabe’s government and a land-reform program that has slashed Zimbabwe’s agricultural output.

Both Mr. Mugabe and Mr. Gono are targeted by the sanctions, which impose travel bans and asset freezes on more than 170 people, companies and farms.

“The country is under illegal sanctions. These are intended to achieve regime change,” Mr. Mugabe charged. “We must strengthen our will and resistance so we can go through this time of difficulty.”

Mr. Mugabe went on television just as South African President Thabo Mbeki was jetting in to meet with him about stalled power-sharing talks. Mr. Mbeki was greeted by Mr. Mugabe at Harare airport Wednesday afternoon. The two shook hands and briefly embraced before leaving together.

Mr. Mbeki has insisted the power-sharing talks that started last Thursday were going well and had simply adjourned on Monday.

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