Zimbabwe allows foreign currency

Robert Mugabe, who has consistently blamed Zimbabwe's financial woes on the actions of foreign businesspeople, has finally acknowledged the need for foreign currency to bolster his country's battered economy. The Zimbabwe dollar remains the legal tender but around 250 wholesalers and 1,000 retailers are to be licensed to accept foreign currency as an 18-month "experiment", Gideon Gono, the reserve bank governor and Zanu-PF party member said yesterday.

Zimbabwe's dollar - worth more than the US greenback in 1990 - has suffered a rampant inflation rate, surging to a record 11.2 million percent in June, the highest in the world.

"These reforms are essentially a pragmatic response to the realities in the economy," Gono said. "We have watched and observed with heavy hearts the suffering of fellow Zimbabweans as they wait and continue to wait in long queues at the borders as they bring in basic commodities. We have also seen desperate mothers, youth and the elderly spending cold nights in foreign lands as they seek for basic commodities."

However analysts point out the move will also boost government coffers. "They can't physically print enough Zimbabwean money," said one Harare-based economist. "I think this is what's caught them out. They seem to have run out of other options so the use of somebody else's money seems a good idea."

Meanwhile the historic power-sharing deal between Robert Mugabe's Zanu-PF and Morgan Tsvangirai's Movement for Democratic Change (MDC) is expected to be agreed today. A signing ceremony will be held at the Rainbow Towers in Harare this afternoon.