By Nelson Banya
HARARE (Reuters) - Zimbabweans are being allowed to do business in foreign currencies as part of a bid to tackle the hyperinflation that has destroyed the Zimbabwean dollar, acting Finance Minister Patrick Chinamasa said on Thursday.
Zimbabwe's currency has collapsed and the economy is in ruins. The crisis shows no sign of ending without concrete moves by President Robert Mugabe and the opposition to implement a power-sharing agreement.
"The government is allowing the use of multiple foreign currencies for business alongside the Zimbabwean dollar," Chinamasa said in a budget speech that was presented in U.S. dollars for the first time.
"In the hyperinflationary environment characterising the economy, our people are now using multiple currencies alongside the Zimbabwean dollar. These include the (South African) rand, U.S. dollar, Botswana pula, euro and British pound among others."
Chinamasa projected Zimbabwe's gross domestic product at $5.5 billion (3.85 billion pound) for 2009. The country's GDP was $6.186 billion in 2007, according to the World Bank. Data for 2008 is not available.
The currency liberalisation, however, could make life even harder for ordinary Zimbabweans because most will be paid in local currency but forced to pay for many goods and services in foreign currency.
"I don't know how the army, teachers and the police will survive with their Zim dollar salaries. That to me is the crunchline, how long can they (civil servants) put up with this," said Tony Hawkins, a lecturer in business studies at the University of Zimbabwe.
"We have been given one side of the equation, the foreign currency side. But most people are on the wrong side of the equation and will struggle," Hawkins said.
FOOD CRISIS WORSENS
Zimbabwe's economy, once one of the most prosperous in Africa, has disintegrated since President Robert Mugabe's government in 2000 began seizing white-owned commercial farms and distributing the land to poor blacks.
Agricultural output has fallen sharply, official inflation has soared to 231 million percent and food and fuel are in short supply. The United Nations said on Thursday unemployment was 94 percent.
Mugabe's critics, including the opposition Movement for Democratic Change, blame his policies for the country's woes. The veteran Zimbabwean leader says Western sanctions have strangled the economy.
The MDC's shadow finance minister, Tapiwa Mashakada, attacked the budget.
"There is nothing in this budget to address the real issues affecting the nation. It is artificial in its treatment of the very serious issues that have dislocated the national economy and transfers a lot of authority to the Reserve Bank whose policies are also to blame for our problems," he said.
Many Zimbabweans have pinned their hopes of a recovery on a power-sharing agreement reached in September between Mugabe's ZANU-PF party and two factions of the MDC. It had been stalled by disagreement over control over key ministries.
Regional leaders said a breakthrough was reached earlier this week at a summit in South Africa.
MDC leader Morgan Tsvangirai has said he has agreed to form a government with Mugabe, although his MDC voiced disappointment with the deal reached at the summit. MDC officials are expected to meet on Friday to discuss how to proceed.
Meanwhile, Zimbabwe's humanitarian crisis is worsening. More than half of its population will need food aid in February and March, the World Food Programme (WFP) said.
The WFP said in a statement it aimed to assist 5.1 million people in February, while a group of U.S.-sponsored aid organisations plans to help 1.8 million more in the southern African country.
"The overall total for people in need of assistance in February and March is around 7 million," the WFP said.
The crisis has been deepened by a cholera outbreak that has killed nearly 3,100 people and infected 58,993 across the country -- the worst death toll in Africa from an outbreak of the normally preventable disease in 15 years.