Some economic commentators have said the ZW $ 50 note issued by the Reserve Bank of Zimbabwe (RBZ) will recently fuel inflation in an economy already ravaged by the COVID-19 pandemic.
The ZW $ 50 bill, stamped with the portrait of liberation icon Mbuya Nehanda, is now Zimbabwe’s highest face value, but it is not enough to buy a loaf of bread.
For some economists, the release of the new note sparked fears of hyperinflation reminiscent of the 2008 era, while others said it would lower the cost of bank withdrawals.
In 2008, Zimbabwe suffered the second worst episode of hyperinflation in history.
The annual inflation rate peaked in November of the same year, hitting 89.7 sextillion percent, according to Steve Hanke, economist and currency expert.
In its weekly review, a civil society organization, the Zimbabwe Coalition on Debt and Development (Zimcodd), said the new note is a repeat of the inflationary experience of 2008/2009 which resulted in the abandonment of the Zimbabwean dollar. . It said:
The highest ratings in Zambia, Botswana and South Africa are worth US $ 4.50, US $ 18.35 and US $ 14, respectively, indicating the decimated purchasing power of the local currency.
The concern of the ordinary citizen is: How many groceries can you buy with the 50 ZW? We need two new 50 ZW banknotes to buy a loaf of bread, while the bundle of banknotes (50 ZW, 20 ZW, 10 ZW, 5 ZW and 2 ZW), when added together, does not allow for buy a loaf of bread.
Zimcodd said the loss of value of the local currency hinders building public confidence, thereby discouraging savings because the interest earned is lower than the rate of inflation.
Confidence in the Zimbabwean dollar is further weakened by the government’s preference for payment for its services in US dollars, demonstrating the government’s loss of confidence in its own currency.
Zimcodd further stated that the introduction of the new ZW $ 50 advances the government’s motive to acquire the US $ from the profits made by issuing the new banknotes.