Oct 12, 2018

Zimbabwe currency crisis: No cash, no KFC

EPA A deepening unease is settling over Zimbabwe as the country's fragile local currency loses value at an alarming speed, prices soar, local and foreign businesses close their doors, and people wonder whether their savings are about to be wiped out once again, as they were during the economic collapse and spectacular hyperinflation that tore through the country a decade ago. EPA. Concern is rising - along with prices - following a series of unexpected government announcements regarding plans for a new 2% tax on money transfers, and for possible changes to a controversial local currency which had been pegged, one-to-one, to the US dollar. "There's no need to panic," insisted Energy Mutodi, deputy information minister with the governing Zanu-PF. "What we're seeing is simply the result of speculative behaviour. People started to hoard. But this should normalise in the next few days. Zimbabweans need to know they are safe under Zanu-PF. The government is committed to reforms, so we need people to really be patient." In 2009, Zimbabwe scrapped its own by-then-worthless currency and relied instead of a range of foreign currencies until 2016, when the bond note was added to the mix, amid deep concerns that it would be used to hide more corruption and unchecked government spending. "We have to accept there will be a currency adjustment. Prices for a lot of non-essential items, in particular, are going to increase. We have tough times ahead. But governments do turn a new leaf and I think they should be given a chance to show what they can do. Things can change. The turnaround can be quite quick."

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