With a major financial crisis on its hands, the Reserve Bank of Zimbabwe on Monday said it was indefinitely extending a deadline for Zimbabweans to turn in bank notes for Z$200,000 which had been scheduled to become worthless as of Jan. 1.
Despite the extension, which left the Z$200,000 notes in circulation along with newer denominations just issued in the amounts of Z$250,000, Z$500,000 and Z$750,000, cash remained in critically short supply around the country. Customers in Harare and other cities were enduring long queues to get money, local sources said.
"The legal tender status of the $200,000 bearer cheques is now reinstated and extended...to a future date which would be announced when it is deemed strategic to do so,” Gono told journalists in a news conference.
“All economic players are therefore, advised and required to continue fully accepting the $200,000 bearer note, as it is a legitimate part of our legal tender," Gono said.
The beleaguered central banker attributed his about-face to widespread inundations following heavy rains "which saw most villagers failing to cross flooded rivers and streams to go to service centers where cash was being swapped."
Sources in Harare said banks started doling out cash in the afternoon after the central bank announced that the Z$200,000 notes were not imminently to expire.
But Barclays Bank and Kingdom Bank were said to have run out of cash.
Shorter lines were reported at Stanbic Bank, where an automated teller machine was also dispensing bills. Long queues were reported in Bulawayo, the country's second-largest city, and eastern Mutare, especially at smaller building societies.
But in Gweru, capital of Midlands Province, conditions were said to be better, with few people queuing for money by around 6 p.m.
The state-controlled Herald newspaper quoted Gono as saying the cash shortage was caused by factors beyond the bank's control. Cash queues, he told the paper, "have shown the extent to which our economy has drifted into the informal sector and which informal sector is predominated by cash transactions. The cash shortages that we see are a mere symptom of much deeper and greater fundamental misalignments in our economy than the ability or inability of the central bank to provide adequate cash."
Economist Nhlanhla Nyathi told reporter Patience Rusere of VOA's Studio 7 for Zimbabwe that the extension of the life of the Z$200,000 bearer cheques would offer only short-term relief to customers as the shortage reflected deeper problems.
Elsewhere, the Zimbabwe Lawyers for Human Rights called for an investigation into what the group said was corruption at the central bank in the currency operation.
Director Arnold Tsunga said the recently reported case of “cash baroness” Dorothy Mutekede, allegedly caught with Z$10 billion in new notes before they were widely circulated, suggested there had been corrupt practices at the central bank.
The Mutekede case collapsed when police and RBZ officials disposed of the money before the matter was brought to court, leaving the magistrate with no evidence.
Prosecutors brought in Jonathan Kadzura, an influential ZANU-PF member accused by Mutekede of giving her the cash, was brought in as a state witness.
Magistrate Mishrod Guvamombe accused police and the central bank of obstructing justice, remarking that it seemed clear the funds had come from the central bank and adding that police did not seem keen to investigate what he called “big fish."
The human rights lawyers accused central bank chief Gono of public posturing and charged that the central bank and the officials within it were the main drivers of hyperinflation and the country's parallel markets in currency and goods.
Attorney Otto Saki of the Zimbabwe Lawyers for Human Rights told Blessing Zulu that it was not surprising money on the parallel market came from the central bank.
More reports from VOA's Studio 7 for Zimbabwe...