afrol News, 26 September - Zimbabwe's central bank has allowed at least 600 shops to accept foreign currency in trade, a move seen as an admission that its own currency has collapsed.

The change is expected to ease acute food shortages that have coincided with Zimbabwe's record inflation and economic meltdown.

Reserve Bank Governor Gideon Gono said allowing motorists to buy fuel and some shops to charge in foreign currency would stop thousands of Zimbabweans from going shopping in neighbouring countries and revive struggling manufacturers.

"A total of 600 applications have been successfully vetted," said Mr Gono during a ceremony to hand over licences.

Mr Gono said Zimbabwe dollar remained official currency and that basic commodities like maize-meal, sugar, cooking oil, school uniforms and medicines would be sold in local currency unless there was proof they had been imported.

Previously individuals were only allowed to withdraw a maximum of US $1,000 from their accounts upon producing proof of travel. They will now be able to withdraw any amount.

Government and central bank have been struggling to contain Zimbabwe's economic meltdown, with official inflation at 11 million per cent, the highest in the world, though independent financial institutions put real inflation closer 50 million per cent.

With foreign currency trade now legal, business managers said they expected goods to slowly return to supermarket shelves, though it would take time to find stocks and work out financial details.

Stores will be able to sell goods for both hard currency and the local Zimbabwe dollar. Only imported goods may be sold for hard currency.

Local reports say basic goods are scarce in Zimbabwe and when they become available they are sold at high prices, further indicating that consumers pay less when using cash, which is in short supply, while those using electronic transfers and cheques can pay up to ten times more.

In August central bank struck 10 zeros from Zimbabwe currency, but computerised accounting systems and automatic tellers have been unable to handle transactions in trillions of local dollars.

President Robert Mugabe, in power since independence from Britain in 1980, blames Western sanctions for economic collapse. But critics point to his 2000 order that commercial farms be seized from whites.

By staff writer

© afrol News

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