Fighting inflation with mega-currency
Because of runaway inflation, it takes thousands of bills to buy even the most basic items in Zimbabwe. The government is now circulating notes up to 10 million. Scott Jagow talks with correspondent Gretchen Wilson.
A man outside a bank holds the new Zimbabwean dollar 500,000 note. Zimbabwe is suffering an economic collapse, with chronic shortages of hard currency, food and fuel. (Desmond Kwande/AFP/Getty Images)
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TEXT OF INTERVIEW
Scott Jagow: In Zimbabwe, a wallet or a purse just won't do it -- people need backpacks to carry their money around. It takes stacks of bills to buy even the most basic things.
Tomorrow, Zimbabwe's government is releasing some new notes into circulation. They are one-million, five-million and 10-million-dollar bills.
Correspondent Gretchen Wilson joins us from Zimbabwe's neighbor, South Africa.
Scott Jagow: Gretchen, has Zimbabwe's inflation really gotten that bad, they need a 10-million-dollar bill?
Gretchen Wilson: It actually has -- as you know, inflation is hovering around 8,000 percent annually as the official rate. And with inflation like this, each day consumers are needing more and more bills for basic transactions. And with that comes cash shortages, long lines at banks, and this is the kind of stop-gap measure that the government's come up with to address that.
Jagow: Well, for example, how much does a carton of eggs cost?
Wilson: I would have to say I haven't been in Zimbabwe for the past few months, but when I was there a bottle of Coke cost about 65,000 Zimbabwean dollars.
Jagow: Now, how much is 10 million Zimbabwean dollars to U.S. dollars?
Wilson: That 10-million-dollar bill is going to be worth officially about $330 U.S. dollars. But the trading price on the black market? That 10-million-dollar Zimbabwean bill is going to be about $50, more or less, on the black market.
Jagow: And I also understand that the amount that people can take out of the bank has been increased?
Wilson: Yes, that's what's happened. Right now, if you go to the streets of Harare, the capital, you'll find at every bank there are people who are sleeping outside, who are lining up all day just to get into the bank and withdraw the maximum amount, which is 15 million Zimbabwean dollars. The Reserve Bank says they're going to raise that limit to 500 million. They say it's actually driving people to stand in lines so long, they're actually not being productive.
Jagow: Gretchen, you said this is a stop-gap measure -- what is the government thinking in terms of a long-term solution?
Wilson: The government is really blaming corruption and says that it's oftentimes many people who are turning to the parallel market -- they're actually part of this problem. And they're calling on them to turn in to banks officially. And that's not likely to happen.
Jagow: OK, Gretchen Wilson reporting from South Africa. Thank you.
Wilson: Thank you very much.
