Identifier
Created
Classification
Origin
08HARARE865
2008-09-22 15:59:00
CONFIDENTIAL
Embassy Harare
Cable title:
ZIMBABWE STILL SEEKING PAPER SUPPLIER, AS CASH
how-toVZCZCXRO8533 PP RUEHDU RUEHMR RUEHRN DE RUEHSB #0865 2661559 ZNY CCCCC ZZH P 221559Z SEP 08 FM AMEMBASSY HARARE TO RUEHC/SECSTATE WASHDC PRIORITY 3477 INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE RUEHUJA/AMEMBASSY ABUJA 2087 RUEHAR/AMEMBASSY ACCRA 2319 RUEHDS/AMEMBASSY ADDIS ABABA 2438 RUEHBU/AMEMBASSY BUENOS AIRES 0003 RUEHBY/AMEMBASSY CANBERRA 1716 RUEHDK/AMEMBASSY DAKAR 2071 RUEHKM/AMEMBASSY KAMPALA 2492 RUEHMO/AMEMBASSY MOSCOW 0036 RUEHNR/AMEMBASSY NAIROBI 4924 RUEAIIA/CIA WASHDC RUEHGV/USMISSION GENEVA 1587 RHEHAAA/NSC WASHDC RHMFISS/JOINT STAFF WASHDC RUEHC/DEPT OF LABOR WASHDC RUEATRS/DEPT OF TREASURY WASHDC RHEFDIA/DIA WASHDC RUCPDOC/DEPT OF COMMERCE WASHDC RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK RUZEHAA/CDR USEUCOM INTEL VAIHINGEN GE
C O N F I D E N T I A L HARARE 000865
SIPDIS
AF/S FOR G. GARLAND
AF/EPS FOR ANN BREITER
NSC FOR SENIOR AFRICA DIRECTOR B. PITTMAN
STATE PASS TO USAID FOR L.DOBBINS AND E.LOKEN
TREASURY FOR J. RALYEA AND T.RAND
COMMERCE FOR BECKY ERKUL
ADDIS ABABA FOR USAU
ADDIS ABABA FOR ACSS
E.O. 12958: DECL: 09/22/2018
TAGS: ECON EFIN PGOV ASEC AR RS ZI
SUBJECT: ZIMBABWE STILL SEEKING PAPER SUPPLIER, AS CASH
CRUNCH WORSENS
REF: HARARE 0760
Classified By: Charge d'Affaires Katherine Dhanani for reason 1.4 (d).
C O N F I D E N T I A L HARARE 000865
SIPDIS
AF/S FOR G. GARLAND
AF/EPS FOR ANN BREITER
NSC FOR SENIOR AFRICA DIRECTOR B. PITTMAN
STATE PASS TO USAID FOR L.DOBBINS AND E.LOKEN
TREASURY FOR J. RALYEA AND T.RAND
COMMERCE FOR BECKY ERKUL
ADDIS ABABA FOR USAU
ADDIS ABABA FOR ACSS
E.O. 12958: DECL: 09/22/2018
TAGS: ECON EFIN PGOV ASEC AR RS ZI
SUBJECT: ZIMBABWE STILL SEEKING PAPER SUPPLIER, AS CASH
CRUNCH WORSENS
REF: HARARE 0760
Classified By: Charge d'Affaires Katherine Dhanani for reason 1.4 (d).
1. (C) Banker James Mushore told econoff on September 19 that
the Argentine company bidding to provide banknote paper to
the Reserve Bank of Zimbabwe (RBZ) (reftel) was Ciccone
Calcografica S.A. He said the bid had come in especially
high because it included a large cut for Reserve Bank
Governor Gono. In the meantime, local paper producer Kadoma
Paper Mills had begun to produce banknote paper with Russian
technical assistance, according to Mushore,s contacts, but
moisture in the paper was causing a 50 percent spoilage rate.
He added that the RBZ was in discussions with a Russian
company (unnamed) to provide secure ink.
2. (C) Mushore said plans were in place for the RBZ to issue
a Z$10,000 note within two weeks, and that a Z$100,000 note
was under design. (NOTE: The RBZ issued a Z$1,000 note last
week; it is worth about US$1.50 on the street today. END
NOTE.) Mushore also said that the German banknote printer
Giesecke & Devrient had reached out to Fidelity Printers
after the signing of the government's power-sharing agreement
on September 15 to explore the possibility of restarting its
supply of banknote paper to Zimbabwe.
--------------
Meanwhile, Cash Crisis Deepens
--------------
3. (SBU) The RBZ is failing to meet banks' cash requirements.
John Mushayavanhu, Managing Director of FBC Bank, and ZB
Bank branch manager Nicholas Chirimuta told us today that a
bank was lucky these days to get Z$100 billion for every
Z$500 billion it requested from the RBZ. They attributed the
shortage to Giesecke & Devrient's pullout from Zimbabwe.
Mushayavanhu dismissed the claim of some financial
journalists that banks did not have enough security to lodge
with the RBZ to get the needed cash. He said most banks had
sufficient balances at the RBZ over and above statutory
reserve requirements to easily buy more cash, if it were
available. Both bankers attributed the long lines for cash
to a combination of the physical shortage and the very low
daily cash withdrawal limit of Z$1,000. Mushayavanhu, who is
also President of the Bankers Association of Zimbabwe (BAZ),
said that when the BAZ appealed to the RBZ to release more
cash, Governor Gono told the bankers to manage the situation
themselves.
--------------
COMMENT
--------------
4. (C) With no indication of a slowdown in the rate of
inflation, pressure is on the GOZ to either locate an
alternate secure paper supplier or make the home-grown
production work. In the meantime, he cash shortage can only
worsen. In the short erm, we expect to see the bank
transfer exchangerate depreciate sharply in reaction. END
COMMET.
DHANANI
SIPDIS
AF/S FOR G. GARLAND
AF/EPS FOR ANN BREITER
NSC FOR SENIOR AFRICA DIRECTOR B. PITTMAN
STATE PASS TO USAID FOR L.DOBBINS AND E.LOKEN
TREASURY FOR J. RALYEA AND T.RAND
COMMERCE FOR BECKY ERKUL
ADDIS ABABA FOR USAU
ADDIS ABABA FOR ACSS
E.O. 12958: DECL: 09/22/2018
TAGS: ECON EFIN PGOV ASEC AR RS ZI
SUBJECT: ZIMBABWE STILL SEEKING PAPER SUPPLIER, AS CASH
CRUNCH WORSENS
REF: HARARE 0760
Classified By: Charge d'Affaires Katherine Dhanani for reason 1.4 (d).
1. (C) Banker James Mushore told econoff on September 19 that
the Argentine company bidding to provide banknote paper to
the Reserve Bank of Zimbabwe (RBZ) (reftel) was Ciccone
Calcografica S.A. He said the bid had come in especially
high because it included a large cut for Reserve Bank
Governor Gono. In the meantime, local paper producer Kadoma
Paper Mills had begun to produce banknote paper with Russian
technical assistance, according to Mushore,s contacts, but
moisture in the paper was causing a 50 percent spoilage rate.
He added that the RBZ was in discussions with a Russian
company (unnamed) to provide secure ink.
2. (C) Mushore said plans were in place for the RBZ to issue
a Z$10,000 note within two weeks, and that a Z$100,000 note
was under design. (NOTE: The RBZ issued a Z$1,000 note last
week; it is worth about US$1.50 on the street today. END
NOTE.) Mushore also said that the German banknote printer
Giesecke & Devrient had reached out to Fidelity Printers
after the signing of the government's power-sharing agreement
on September 15 to explore the possibility of restarting its
supply of banknote paper to Zimbabwe.
--------------
Meanwhile, Cash Crisis Deepens
--------------
3. (SBU) The RBZ is failing to meet banks' cash requirements.
John Mushayavanhu, Managing Director of FBC Bank, and ZB
Bank branch manager Nicholas Chirimuta told us today that a
bank was lucky these days to get Z$100 billion for every
Z$500 billion it requested from the RBZ. They attributed the
shortage to Giesecke & Devrient's pullout from Zimbabwe.
Mushayavanhu dismissed the claim of some financial
journalists that banks did not have enough security to lodge
with the RBZ to get the needed cash. He said most banks had
sufficient balances at the RBZ over and above statutory
reserve requirements to easily buy more cash, if it were
available. Both bankers attributed the long lines for cash
to a combination of the physical shortage and the very low
daily cash withdrawal limit of Z$1,000. Mushayavanhu, who is
also President of the Bankers Association of Zimbabwe (BAZ),
said that when the BAZ appealed to the RBZ to release more
cash, Governor Gono told the bankers to manage the situation
themselves.
--------------
COMMENT
--------------
4. (C) With no indication of a slowdown in the rate of
inflation, pressure is on the GOZ to either locate an
alternate secure paper supplier or make the home-grown
production work. In the meantime, he cash shortage can only
worsen. In the short erm, we expect to see the bank
transfer exchangerate depreciate sharply in reaction. END
COMMET.
DHANANI