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Last Updated: Tuesday, 31 July 2007, 16:23 GMT 17:23 UK
Zimbabwe launches $200,000 note
Empty bakery in Zimbabwe

Zimbabwe is to start circulating a new 200,000 Zimbabwe dollar note, in a bid to tackle the country's inflation, the highest in the world.

The new note, issued by the Reserve Bank of Zimbabwe from Wednesday, can buy 1kg (2.2lb) of sugar.

Food and fuel shortages have become common as the government relies more heavily on imports, pushing prices to new heights.

The official annual rate of inflation in Zimbabwe is more than 4,500%.

In practice, this means the price of a loaf of bread costs 50 times more in cash than it did a year ago.


The new note is worth US$13 at the official exchange rate or $1 on the black market.

Inflation: 4,500%
Unemployment: 80%
3.3m - 25% of the population - need food aid
3m left the country

Zimbabwe's government has created a commission to find a way to control soaring living costs.

But correspondents say that as long as Zimbabwe has a shortage of staple foods, including maize, food shortages are likely to continue.

Critics have blamed President Robert Mugabe's policies, especially the seizure of white-owned farms, for ordinary Zimbabweans' hardship.

For his part, President Mugabe has accused foreign governments of trying to interfere in Zimbabwe's affairs.

The new banknote comes after International Monetary Fund (IMF) forecasts that by the end of 2007, prices will be 1,000 times higher than they were a year earlier, Reuters news agency reports.

"Price controls that are being enforced are likely to exacerbate shortages and ultimately fuel further inflation," said Bio Tchane, director of the IMF's Africa department, who described Zimbabwe's prospects as "bleak".

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