Zimbabwe shelves own currency for a year-paper

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Zimbabwe will not use its own local currency for at least a year, a state newspaper reported on Sunday, while it tries to repair an economy which critics say was destroyed by President Robert Mugabe.
The southern African state has allowed the use of multiple foreign currencies since January to stem hyperinflation which had rocketed to over 230 million percent and left the Zimbabwe dollar almost worthless, Reuters reports.
The state-controlled Sunday Mail said the unity government of Mugabe and opposition leader Morgan Tsvangirai decided the Zimbabwe dollar should only be reintroduced when industrial output reaches about 60 percent of capacity from the current 20 percent average.
“The Zimbabwe dollar will be out for at least a year. We resolved that there will be no immediate plans to (re)introduce the money because there is nothing to support and hold its value,” the newspaper quoted Economic Planning and Development Minister Elton Mangoma as saying.
“Our focus is to first ensure that we have a vibrant industry. If we try to reintroduce the local currency now, it will face the same fate of being wiped out of its value within weeks.” On Thursday, Zimbabwe’s Central Statistical Office (CSO) said consumer prices fell for a third straight month in March after the government abandoned its worthless currency.
The CSO said inflation stood at -3.0 percent month-on-month in March compared with -3.1 percent in February, as food prices fell.
Critics say Mugabe, who has led Zimbabwe since independence from Britain in 1980, has destroyed one of Africa’s most promising economies through controversial policies, including the seizure of white-owned commercial farms for redistribution to inexperienced black farmers.
Mugabe, 85, denies the charge and says the economy has been sabotaged by enemies opposed to his nationalist policies.
Zimbabwe is seeking an urgent cash injection of $2 billion to stabilise an economy suffering unemployment above 90 percent and a severe shortage of foreign currency.
Western donors have held back aid, demanding the unity government in which Tsvangirai is the prime minister undertakes political and other reforms.
Reuters reports Zimbabwe has set up a parliamentary team to spearhead the writing of a new constitution which President Robert Mugabe’s opponents say will be key to holding free and fair elections.
Critics say Mugabe – in power since independence from Britain in 1980 – has used tough security and media laws to stifle opposition to his ZANU-PF party, and has rigged polls in the last 10 years to remain in office.
On Sunday, Zimbabwe’s Speaker of Parliament Lovemore Moyo announced that the new unity government, which Mugabe formed with opposition leader Morgan Tsvangirai in February to try to break a post-election crisis, had assembled a 25-member parliamentary committee to lead the process of writing a new constitution.
The process would include consultations around the country, and the new constitution would have to be approved by a national referendum to be held by mid July next year, Moyo said.
In February 2000, Mugabe’s government lost a referendum for a new constitution which Tsvangirai’s Movement for Democratic Change (MDC) said was meant to tighten ZANU-PF’s grip on power.
Moyo said the new drive by ZANU-PF and the two wings of the MDC which dominate parliament was more inclusive and would lead to “a people-centred, inspired and democratic constitution.”
“We commit ourselves to ensuring that the process will be as credible as possible,” he said.
Political analysts say although there are tensions between Mugabe and Tsvangirai in the new unity government over rights abuses and continuing seizures of white-owned farms by ZANU-PF officials, the power-sharing agreement is likely to hold until the next elections, which are expected to be called in 2011.
Mugabe stoked tensions again at the weekend when he transferred the supervision of the telecommunication industry from MDC cabinet minister Nelson Chamisa to a ZANU-PF official.
“There are all these tensions, and we should expect to see quite a number in the coming months,” said Eldred Masunungure, a political science professor at the University of Zimbabwe.
“But that announcement of the select committee on the constitutional issue is a demonstration that on the big issues, the (power-sharing) agreement is going to hold,” he said.
“There are no viable alternative options for both the MDC and ZANU-PF outside this agreement,” Masunungure said.