Today: November 12, 2002 at 2:10:08 PST

By ANGUS SHAW ASSOCIATED PRESS

HARARE, Zimbabwe- Restaurant customers in Zimbabwe pay with thick wads of local currency bulging in their bags. Real estate buyers hand over deposits of millions of Zimbabwean dollars stuffed into suitcases and car trunks.

Newspaper advertisements have begun offering currency counting machines for sale.

With inflation out of control and a massive shortage of hard currency, the value of the Zimbabwe dollar has collapsed - the latest sign of this nation's economic collapse.

"We are looking at total meltdown. It could in the next few months push the country into absolute collapse," said Harare political analyst Brian Raftopoulos.

On the black market, the value of the Zimbabwe dollar fluctuated wildly Monday. By the afternoon, $1 bought 1,800 Zimbabwe dollars compared to Friday's 1,500.

"The rate is changing by the hour," said one black market dealer on condition of anonymity.

The official rate stands firm at 55 to 1.

Meanwhile, exasperated officials at the central bank are running out of local currency as black marketeers and money launderers withdraw massive amounts of bank notes to buy hard currency.

Central bank officials said they would monitor large cash withdrawals from banks of more than 500,000 Zimbabwe dollars in a bid to trap them.

The government has repeatedly refused to devalue the currency. Unofficial trading has been spurred by a severe hard currency shortage stemming from political instability that has disrupted the main hard currency earning industries: tobacco, tourism and gold mining.

Independent economists say the black market exchange rate has been pushed up by desperate state enterprises seeking hard currency at unofficial rates to pay debts for oil, imported electricity and external fees and debts owed by the state airline. Many of those debts face foreclosure and the termination of supplies and services.

The central bank said last week it deferred a decision on issuing a 1,000 Zimbabwe dollar bank note until after the retirement at the end of the year of Leonard Tsumba, the bank's governor.

The highest existing bill is 500 Zimbabwe dollars. With official inflation at a record 140 percent and forecast to rise to at least 500 percent early next year, the biggest Zimbabwe note, red in color, has become known as a Ferrari, after the red Italian sports car that goes very fast.

Thousands of cars were not going anywhere in Harare on Monday. Travelers reported no gas at stations along the 160 mile main route from the eastern border town of Mutare to Harare.

Oil industry executives say the shortages have been caused by the dearth of hard currency to pay for state-controlled imports and the near-collapse of a deal with Libya that would supply 70 percent of the country's monthly gasoline requirements.

The state National Oil Company holds a monopoly on imports and has pegged gas prices in a bid to stem inflation.

Gasoline in Zimbabwe is the cheapest in the region at about 68 US cents a gallon, half the price of locally produced milk or beer.

Gas imports are being heavily subsidized by the state. Private oil industry executives say on the open market gas would be bought and shipped into the landlocked country for up to about $4 a gallon, raising the consumer price by 600 percent.

Without a heavy price increase, shortages will continue, analysts say.

At least 6.7 million Zimbabweans, more than half the population, face hunger in coming months because of a sharp drop in agricultural production blamed on a drought and the government's seizure of thousands of white-owned commercial farms.

-- Anonymous, November 12, 2002