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Zimbabwe lifts import ban after cash crunch prompts panic buying

President Emmerson Mnangagwa pledged to end long-running currency shortages and revive a struggling economy but his government’s interventions have caused public alarm.

FILE:  A picture shows empty shelves, including those for bread, in a groceries store in Harare on 9 October 2018, as Zimbabwe is experiencing renewed shortages. Picture: AFP.

HARARE - Zimbabwe lifted a ban on the import of basic goods and foodstuffs on Tuesday after shelves were emptied in recent weeks by consumers panicking over a deepening currency crisis.

After winning a disputed election in July, President Emmerson Mnangagwa pledged to end long-running currency shortages and revive a struggling economy but his government’s early interventions have caused public alarm.

The introduction of a new tax on electronic transactions in an economy desperately short of hard cash caused fuel shortages this month and prompted shoppers to stockpile goods, leaving shops empty of basics like cooking oil and sugar.

Zimbabwe introduced a ban on the imports of many basic goods in 2016 as it sought to help its manufacturing recover after more than a decade of contraction.

“Cabinet noted with concern that the basic commodities continued to be in short supply,” Information Minister Monica Mutsvangwa said in a statement.

“As a way forward, Cabinet resolved ... to allow both companies and individuals with offshore funds and free funds to import specified basic commodities currently in short supply, pending the return to normalcy.”

Zimbabwe adopted the use of foreign currencies, mostly the US dollar, in 2009 after its own Zimbabwe dollar was destroyed by hyperinflation.

But a huge trade deficit has led to a shortage of physical US dollar bills in the economy, to which the authorities responded by issuing a “bond note” quasi-currency pegged at parity to the greenback in November 2016.

The bond notes trade at a significant discount to the US dollar on the black market and have failed to address the shortage of banknotes.

On 1 October, the central bank directed banks to separate foreign currency accounts from the bond notes and their associated electronic deposits.

This tacit admission that the bond notes were not at par with the US dollar accelerated its collapse on the black market.

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