IMAGE: Zimbabwe currency
Desmond Kwande / AFP - Getty Images
A resident of Zimbabwe displays a newly unveiled bank note on the streets of Harare on Aug. 1.  Zimbabwe's Reserve Bank slashed three zeroes from its currency last week to help consumers battling rapid inflation.
updated 8/8/2006 11:13:57 AM ET 2006-08-08T15:13:57

Zimbabwean authorities have arrested more than 2,000 people accused of money laundering since the introduction last week of a currency reform intended to tame the world’s highest inflation rate and prop up the teetering economy.

The Reserve Bank last week knocked off the final three digits from the currency — thus 100,000 Zimbabwe dollars became 100 Zimbabwe dollars. It also gave a deadline of Aug. 21 for exchanging the old notes but set limits on how much individuals and businesses could deposit without having to answer questions about the origins of the money.

The Herald newspaper said Monday that 2,036 people have been arrested by security forces trying to stop syndicates seeking to evade the controls by dividing stashes of money among several people.

Threats and confusion
The government also warned it would not tolerate threats against Central Bank chief Gideon Gono, who pushed through the reforms last week, the Herald reported. Gono said the reforms are vital to try to bring down inflation, the highest in the world at nearly 1,200 percent.

The measures — which have caused confusion among beleaguered Zimbabweans about the real worth of their money — have met with opposition.

On Thursday, a gang of four armed men in an unregistered sports utility vehicle tried to storm a business project of Gono, demanding his residential address. On Friday, a fire gutted part of his farm, destroying some of his maize crop, according to the Herald.

Gono said he would not be deterred. “There is no amount of intimidation that will force me to abandon the task at hand,” the newspaper quoted him as saying.

State Security Minister Didymus Mutasa pledged full support for Gono.

“Government is not happy with the threats directed at Dr. Gono,” Mutasa said. “The actions are very deplorable. We take the threats very seriously and let me warn those who want to derail our economic recovery program that they will be arrested and brought to justice.”

Economy in free-fall
The country’s economy has been in free-fall since February 2000 when the government began seizing thousands of white-owned commercial farms for redistribution to blacks, crippling the key agriculture sector.

As the economy has plummeted, government services have declined and millions have become dependent on aid.

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