2009 – On January 16, Zimbabwe makes history; it releases a $100 trillion note, the largest denomination ever seen in the world. It is later to become a collectible, and a symbol of failed economic management.
Zimbabwe effectively dollarises on January 29, when, for the first time ever, a budget is presented in both US dollars and Zimdollars. Acting Finance Minister Patrick Chinamasa reels off the dizzy numbers, including $175 quadrillion for grain imports. His budget speech is accompanied by howls of laughter and derision from MPs.
The move to USD overnight eradicates hyperinflation, but the economy soon swaps hyperinflation for deflation.
The Zimdollar remains in circulation, although nobody is using it. On 2 February, the RBZ removes a further 12 zeros off the currency. In total, 25 zeroes were removed from the Zimdollar.
This was the beginning of the end of a currency that at Independence in 1980, was stronger than the US dollar, trading at 1ZWD: US$1.54.
In August, Gono proposes return of Zimdollar. He is criticised sharply, even by The Herald, which calls him out of touch and unable to “read the national mood”.
In his mid-year budget, Finance Minister Tendai Biti, appointed in February as part of the unity government, announces the local currency will be demonetaised, saying he is “putting a tombstone on the grave of the Zimbabwe dollar”.
Biti frees up exchange controls, including removing withdrawal limits. “There is no limit on the amount of foreign exchange that can be withdrawn from these FCAs,” a list of guidelines on currency exchange says in July 2009.
2011 – The economy is experiencing strong economic growth, but the current account is giving warnings. It shows that there is more money leaving the country, than money coming in.
2012 – Cash shortages are already beginning to show. RBZ announces temporary withdrawal limits. However, at a joint press briefing that same year, Gono and Biti announce that they are removing all cash withdrawal limits, “in view of the improving liquidity situation in the economy and the need to encourage savings and use of the formal banking system”.
The consequences begin to bite.
The African Development Bank raises a red flag; it expresses concern over the falling levels of bank deposits in Zimbabwe, blaming weak controls and low depositor confidence. The bank warns that this will hurt Zimbabwe’s long term growth.
2013 – In March 2013, concern grows as Zimbabwe slips into deflation.
2014 – RBZ authorises use of a dozen currencies to trade alongside the dominant US dollar. The currencies include the Indian rupee, the Japanese yen and the Chinese yuan. The bond coin is introduced, as a means of ending the shortage of small change.
Continued next page
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