Zimbabwe's government is believed to be drawing up measures to tackle the country's chaotic foreign currency trading arrangements and regain control of the exchange rate.

The plan amounts to a de facto devaluation, according to Professor Tony Hawkins of the University of Zimbabwe's Graduate School of Management, who has seen some of the documents.

President Robert Mugabe has previously opposed any move towards devaluation as a solution to Zimbabwe's economic turmoil, which is threatening about half its 14 million people with starvation.

Zimbabwe's leading firms have been campaigning for change, as they are forced to pay black market rates for foreign currency needed to buy supplies but must change export earnings at the official rate.

Three-tier system

The latest plan proposes to maintain the "hugely overvalued" official exchange rate of 55 Zimbabwe dollars to one US dollar, but to create two other rates for key groups of exporters, said Professor Hawkins.

Mining firms would use a rate of 1,350 Zimbabwe dollars to $1, similar to the current black market rate.

For other exporters, the rate would be $1 to 800 Zimbabwe dollars. Tobacco exporters are likely to be come under this exchange rate band.

Rumours of the plan have been circulating in the Zimbabwe press for several days.

'Not viable'

Zimbabwe's leading nickel miner, Bindura, said on 31 January that the foreign exchange regime was threatening the company's viability.

The Zimbabwe Chamber of Mines (ZCM) demanded government intervention in January, warning that conserving foreign currency at the expense of the export sector was harmful to the economy.

"The export sector is simply not viable at $1 to 55 Zimbabwe dollars. Some level of government support...will be required in order to restore export viability," said ZCM.

U-turn

Zimbabwe's government tried in November 2002 to stamp out the black market in foreign currency by closing all bureau de change.

The latest proposals are "an attempt to formalise (the parallel market) and legalise it", said Professor Hawkins. The scheme's complexity is "a reflection of desperation", he added.

Zimbabwe is in the grip of its worst economic crisis since the end of white rule 22 years ago.

Unemployment is at 70%, while inflation tops 100% though the real rate is probably much higher due to the black market which is outside the government's price controls.