Progress for Zimbabwe currency reforms as it circulates higher bank notes

HARARE, May 14 (Reuters) – Zimbabwe will introduce higher denomination bank notes to increase the amount of cash in circulation, the finance minister said in a government notice on Thursday, at a time inflation is soaring and pushing prices beyond the reach of the majority.

The southern African nation brought back the discredited Zimbabwe dollar currency last year in June after a decade of dollarisation. The move failed to end severe cash shortages and unleashed inflation, which reached 676.39% in March, one of the highest in the world.

Mthuli Ncube said the central bank would start circulating 10 and 20 Zimbabwe dollar ($0.80) notes. Until now, the highest denomination was a 5 Zimbabwe dollar bank note.

Although the central bank has previously said it would not print money to finance the budget, many Zimbabweans have bad memories of the central bank’s money printing activities that caused hyperinflation a decade ago, wiping pensions and savings.

Economic analysts say the government’s budget is under pressure from spending to combat the coronavirus outbreak, which will force authorities to resort to printing money, stoking inflation further.

Inflation is seen ending this year way above the central bank and treasury’s target of 50%.

Zimbabwe is in the grips of its worst economic crisis in a decade, marked by shortages of foreign currency, cash, food and medicines.