There are cash-strapped governments, and there are broke governments. And then there’s Zimbabwe, which, after paying last week’s government salaries, has just $217 (Rs 11,500) in the bank.
After paying public workers’ salaries last week, the balance in cash-strapped Zimbabwe’s government public account stood at just $217, Finance Minister Tendai Biti said on Tuesday.
“Last week when we paid civil servants there was $217 (left) in government coffers,” Biti told journalists in the capital Harare, claiming some of them had healthier bank balances than the state.
“The government finances are in paralysis state at the present moment. We are failing to meet our targets.” The African nation — rich in plutonium and diamond reserves — has been struggling to recover from hyperinflation that stretches back a decade.
In the past few years, flagging diamond exports as well as salary hikes have compounded the nation’s financial woes. The country finds itself in particularly dire straits now as it appears to be short on funding for its upcoming national elections.
Zimbabwe is aiming to double exports of diamonds this year but that likely won’t be enough to bail itself out. “We will be approaching the international community [for financial assistance],” said Finance Minister Tendai Biti.
The country’s elections agency said it requires $104 million to organise the vote. Even if the elections are ultimately funded, many fear violence will stand in the way of meaningful change. The idea of a country going broke, of course, isn’t so novel as France, Spain and Greece remain perilously close to bankruptcy due to the Eurozone crisis. Iceland declared bankruptcy in 2008 due to the 2007 credit crisis, while Argentina did so in 2002 after the collapse of its national currency.
The $500-million bank note
In 2009, the country’s bank introduced a $50 billion note enough to buy just two loaves of bread as a way of fighting cash shortages amid spiralling inflation. The amount is equal to approximately Rs 100.
Three weeks earlier to releasing the $50-billion note, the country introduced a $10 billion note that could buy 20 loaves of bread. Realising the worthlessness of the currency, the country has allowed most goods and services to be charged in foreign currency.