January 16, 2009 / 4:18 PM / 10 years ago

UPDATE 2-Zimbabwe to launch Z100 trillion dollar note-report

(Adds cholera death toll, cases, paragraph 10)

By Nelson Banya

HARARE, Jan 16 (Reuters) - Zimbabwe’s central bank will issue a 100 trillion Zimbabwe dollar banknote, worth about $33 on the black market, to try to ease desperate cash shortages, state-run media said on Friday.

Prices are doubling every day and food and fuel are in short supply. A cholera epidemic has killed more than 2,000 people and a deadlock between President Robert Mugabe and the opposition over power sharing has dampened hopes of ending the crisis.

Hyper-inflation has forced the central bank to keep issuing new banknotes which quickly become almost worthless. There is an official exchange rate, but most Zimbabweans resort to the informal market for currency transactions.

As well as the Z$100 trillion dollar note, the Reserve Bank of Zimbabwe plans to launch Z$10 trillion, Z$20 trillion and Z$50 trillion notes, the Herald newspaper reported.

“... the Reserve Bank of Zimbabwe has introduced a new family of banknotes which will gradually come into circulation, starting with the Z$10 trillion,” the Herald said, citing a central bank statement.

Previous banknote issues have done little to ease the plight of Zimbabweans who often line up for hours outside banks to withdraw barely enough to buy a loaf of bread.

Critics blame the economic meltdown on government mismanagement, including the seizure and redistribution of thousands of white-owned farms. The once-thriving farm sector has fallen into ruin.

Mugabe, 84, in power since independence from Britain in 1980, says Western sanctions are the main cause of the economic crisis and worsening humanitarian situation.

A worsening cholera epidemic has piled pressure on politicians to bury their differences and try to ease the suffering of millions. The disease has killed 2,225 people out of 42,675 cases, U.N. figures show.

Political analysts say the establishment of a unity government between Mugabe’s ZANU-PF party and the opposition Movement for Democratic Change (MDC) is the best hope of reversing the economic slide and the humanitarian crisis.

But power-sharing talks are deadlocked over the control of key ministries. Tsvangirai accuses Mugabe of trying to assign the MDC a junior role and has demanded the release of detained opposition members and activists.

Detainees include rights campaigner Jestina Mukoko, accused with others of plotting to topple Mugabe. A court gave her permission on Friday to ask the Constitutional Court to release her.

In neighbouring South Africa, European and South African ministers called on the Zimbabwean parties to implement their agreement.

“Ministers expressed grave concern at the ongoing violence and abductions and recognised that a political solution to Zimbabwe’s problems is critical to bringing an end to this cycle,” they said in a statement.

The presidents of South Africa and Mozambique meet Zimbabwean political parties on Monday in a new push to break the impasse.

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