When is a devaluation not a devaluation? When Mugabe is your boss
ZIMBABWEAN tyrant Robert Mugabe strikes terror into many Zimbabweans - including his central bank governor, it emerged yesterday.
So anxious not to offend the authoritarian Mr Mugabe is Dr Gideon Gono, the governor of the Reserve Bank of Zimbabwe (RBZ), that, when he announced a huge devaluation, he insisted it wasn’t really a devaluation at all.
Mr Mugabe, 83, is famously opposed to any form of devaluation of the Zimbabwe dollar. He wants exporters and tourists to continue selling their hard currency to the cash-strapped authorities at the official exchange rate of 250 Zimbabwe dollars to $1 US (500 Zimbabwe dollars to the pound). That’s about 100 times less than the street rate.
Mr Mugabe and his lieutenants’ refusal to move the exchange rate has forced many exporters to shut. Almost all of the country’s gold mines have closed down, while growers of tobacco - once Zimbabwe’s main foreign currency earner - have refused to sell their crops, sending Zimbabwe further into economic crisis. Businessmen and locals sent foreign currency by relatives abroad risk arrest and prison if found trading their notes on the parallel market.
Yesterday, Dr Gono effectively devalued the Zimbabwe dollar 60-fold in a last-ditch bid to persuade tobacco farmers to sell up and holders of hard currency to surrender it to the central bank.
However, the central bank chief maintained he was sticking to the official exchange rate.
Dr Gono said Zimbabweans would still have to exchange their hard currency at the 250:1 US dollar rate - but would then have their payouts upped by a “drought accelerator factor” of 60. “There is no devaluation,” Dr Gono insisted. “The exchange rate policy remains as is.”
This means a tourist who sells 100 to an RBZ office will get 3 million Zimbabwe dollars. Previously, the payout was 50,000 Zimbabwe dollars.
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