ZIMBABWE
As Zimbabwe ' s money runs out, so does Mugabe ' s power
In Zimbabwe, where worthless $ 100 trillion notes serve as reminders of the perils of hyperinflation, President Robert Mugabe is printing a new currency that jeopardizes not just the economy but his own long grip on power
AFTER A 2008 MULTI-BILLION PERCENT INFLATIONARY MELTDOWN CAUSED BY RAMPANT MONEY- PRINTING
In Zimbabwe, where worthless $ 100 trillion notes serve as reminders of the perils of hyperinflation, President Robert Mugabe is printing a new currency that jeopardizes not just the economy but his own long grip on power.
Six months ago, the 92-year-old announced plans to address chronic cash shortages by supplementing the dwindling U. S. dollars in circulation over the past seven years with ' bond notes ', a quasi-currency expected at the end of November.
According to the Reserve Bank of Zimbabwe( RBZ), the bond notes are officially interchangeable 1:1 with the U. S. dollar and should ease the cash crunch. The central bank also promised to keep a tight lid on issuance.
After a 2008 multi-billion percent inflationary meltdown caused by rampant money-printing, many Zimbabweans are sceptical. The plan has already caused a run on the banks as Zimbabweans empty their accounts of hard currency. Internal intelligence briefings seen by Reuters raise the possibility that the bond notes, if they crash, could spell the end of Mugabe ' s 36 years in charge.
A Sept. 29 Central Intelligence Organisation( CIO) report revealed the powerful army was as unhappy as the rest of the population with the new notes and had told Africa ' s oldest leader to " wake up and smell the coffee ". " Top security officers have told Mugabe not to blame them if
TOP SECURITY OFFICERS HAVE TOLD MUGABE NOT TO BLAME THEM IF ROME STARTS TO BURN
Rome starts to burn," the report said.
Reuters was unable to determine the author of the report. It is also unclear if Mugabe has seen the report, whose final audience is not specified. Mugabe ' s spokesman did not respond to requests for comment, nor was the CIO available. But the report offers a rare glimpse into the thinking of Mugabe ' s security forces- the backbone of his power- and their concerns about the implosion of what used to be one of Africa ' s most promising economies. " Mugabe was openly told that the bond notes are going to cause his downfall," the report said.
Waiting For The Drop
The notes ' first test will come in the informal foreign exchange markets on the streets of Harare. If they fall heavily in value, they are likely to un-
40 Business Times Africa | 2016