Zimbabwe bank, like people, can't cope with inflation

As the leaders of the Group of Eight (G8) rich nations, meeting in Japan Tuesday, vowed to pursue sanctions against Zimbabwe over recent violent elections the economic woes of the southern African country continued to deepen.

The state-controlled Herald newspaper reported that one of the country's main banks had closed its automated teller machines (ATMs) because they could not cope with the large numbers of zeroes in the sums of cash they dispense.

The Herald, which usually refrains from reporting news that casts President Robert Mugabe's regime in a bad light, also reported that one of Zimbabwe's main bakeries had stopped production.

The reports reflect the dire straits in which Zimbabweans find themselves as the daily foraging of the masses for food grows increasingly desperate.

Annual inflation hit an unofficial 9 million per cent in May, while one US dollar is now worth 25 billion Zimbabwe dollars.

The highest-denomination banknote, the 50 billion dollar note, is just about enough for a 750 ml bottle of beer, if you can find it. Retailers say that Natbrew, the country's monopoly brewer, has also stopped production.

Lobels Bakeries, one of the few bakeries that had still been turning out 300,000 loaves a day until Monday, sent 1,200 workers home on paid leave after running out of flour last week, said operations manager, Cydwell Chitewe.

Chitewe said Lobels could not afford to continue production because the state forces bakeries to charge 440 million dollars for a loaf that costs 800 million dollars to produce.

British-owned Barclays bank announced that its ATMs were no longer able to dispense cash because it had not been able to configure the software to cope with the recently-issued 5 billion, 25 billion and 50 billion dollar notes.

"Our system can only take a certain number of characters. If the characters exceed the capacity, a data overflow will occur, which, in simple terms, means 'error'," said a spokesman.

The situation has been compounded by a shortage of cash following a decision by German company Giesecke & Devriant to stop supplying banknotes to Zimbabwe's central bank, under pressure from Chancellor Angela Merkel's government.

Stocks of food in shops have, meanwhile, dropped to new low levels.

Apart from some fruit and vegetables, a large Bon Marche (good value in French) supermarket in Harare had only packets of puffed maize snacks on its shelves Monday, spaced several centimetres apart to combat the impression of emptiness.

Last week, police in urban areas forced companies to drop their prices, resulting in frantic scrambles for cheap goods that went on sale again almost instantly on the street, at hugely inflated prices.

To the long queues that form daily in front of ATMs and bakeries now comes a third - the queue for airtime cards for the state-run mobile phone service, now also in short supply.

"This is a terrible country," said Richard Chibaya, an office manager. "It now costs me 100 billion Zimbabwe dollars a day to catch the minibus home. It is madness."

Some analysts see the slow choking of the economy as the only real threat to the authority of 84-year-old Mugabe, who was sworn in as president for another five years in June, following elections he alone contested.

Opposition Movement for Democratic Change (MDC) leader Morgan Tsvangirai, whom the West says should head any powersharing government, has refused to hold talks with Mugabe until state-backed militia violence against his supporters ends and an AU envoy is appointed.

"It cannot go on like this for much longer," said one economist, who asked not to be named. "We are nearing the point when the whole bangshoot closes down, where the money is totally worthless and it makes no sense to manufacture or sell anything."

"When that happens, Mugabe is in big trouble. He will lose the loyalty of the security apparatus that is keeping him in power," the economist predicted, acording to dpa.

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