Fidelity Printers stretched beyond capacity
February 2, 2009
By Raymond Maingire
HARARE – Reserve Bank governor, Gideon Gono has admitted the central bank money printing machines have become overwhelmed by the persistent demand for new bank notes.
Gono said Fidelity Printers, governmentâ€™s minting company, can only churn out two million notes per day and was thus unable to print lower denomination notes, which are in short supply in Zimbabwe.
The central bank chief last month introduced a 10 trillion dollar bank note, by far the highest denomination in the world.
Zimbabwe experiences recurrent cash shortages caused by hyper-inflation, which was last July calculated to be over 230 million percent but is now believed to be much higher.
â€œThe country has suffered bouts of cash shortages which have disadvantaged both the corporate and household sectors of the economy,â€ Gono said Monday while presenting his first monetary policy during which he further loped off 12 zeroes from Zimbabweâ€™s multi-digit currency.
It was his first monetary statement since his reappointment for a second five year term in November last year.
â€œThe printing capacity at Fidelity can only print two million pieces of currency.
â€œTwo million pieces of currency if we decide to print 10 dollar notes, in order to cause convenience to the transacting public, it means we can only print two million times 10.
â€œYou will agree with me that that kind f money is not sufficient even for a person or one customer.
â€œIf we decide to print 100 million dollar notes, it means two million multiplied by 100. That is the capacity that we can print per day.â€
Gono, whose controversial monetary policies are blamed for Zimbabweâ€™s hyper inflation, said the central bank would need another minting company and an additional two years to satisfy the abnormal demand for cash in Zimbabwe, which he attributed to that Zimbabweans have since abandoned the use of alternative sources of payment such as cheques and credit cards.
â€œIt is both an engineering and a physical challenge which as governor, my team can only do very little about even with the best heart and will in the world,â€ he said.
â€œIf we are to overcome that and have a second Fidelity, we would need US$500 million in the form of capital, we would need a lead time of not less that two years and as you know, we donâ€™t have that much and therefore the message is you cannot have your cake and eat it.â€
He said the central bank was forced to adopt desperate measures to keep the demand for cash within manageable levels.
â€œIf the demand, as imposed by yourselves is higher than that and you continue to demand that you want all your money, you leave the governor and his team with no choice than to allow you to have your money but in feasible denominations that allow for every other customer demanding the same to have it.
â€œAs a country we have had to come to terms with the stubborn reality that we were put under economic sanctions by Germany which unilaterally cut a 50 year old contract to supply us with currency printing paper, machinery, spare parts, ink and other consumables without notice in July last year.
â€œSo this stubborn reality which is beyond the control of the central bank has been lost to those in our country who while they do not want to take responsibility for anything are nevertheless very quick to blame the governor for the high denominations as if there is any other alternative given the ever growing demands for cash in the hyper inflationary environment.â€
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