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Zimbabwe Faces Currency Shortage

Zimbabwe's list of economic problems is growing, and the latest addition is a dire shortage of money. Armed riot police have been deployed at banks to disperse crowds of people trying to cash their paychecks or make withdrawals.

Police have been called to maintain order as thousands of Zimbabweans mob the banks in a desperate attempt to cash paychecks or access their accounts. Lack of money is the latest problem for Zimbabwe's devastated economy.

There was no serious violence Monday, and police maintained a heavy presence outside building societies which opened their doors for business hours later than usual. Officials at the Central African Building Society said bank notes had not arrived from the Central Bank.

Most banks were limiting cash withdrawals to between $ZIM5,000 and $ZIM10,000, the equivalent of $6-12 US dollars at the official rate.

This is the second month when bank notes have been in critically short supply. On the street, bank notes are available at up to 20 per cent premium.

Economist Peter Robinson says the cash crisis is fueled by Zimbabwe's runaway inflation, and that the Central Bank had warned the government of the impending problem several months ago. Zimbabwe's official inflation, running currently at 360 percent annually, is one of the world's worst. Mr. Robinson says the real inflation figure is much higher.

Zimbabwe is in the midst of the worst economic crisis since its independence in 1980. Unemployment runs at 70 percent and there are shortages of everything, including food, gas and medicine. Foreign investment has largely disappeared, as allegations of human right abuses by President Robert Mugabe's government continue to pile up.

Half of Zimbabwe's factories and commercial farms have shut down, and the shortage of cash is destroying the rest of the economy.