THE Reserve Bank of Zimbabwe (RBZ) has offered to pay a paltry flat $5 as compensation to each account holder who lost their Zimbabwean dollar cash savings during the cross over to the multi-currency system in 2009.
Presenting his first Monetary Policy Statement for 2015 in Harare yesterday, RBZ governor John Mangudya said the central bank required about $20 million for the demonetisation programme, adding the money would start reflecting in clients’ accounts by June 30 this year.
Demonetisation is the process where a particular currency or valuable mineral is degraded as a legal tender.
Many people and corporate bodies lost huge cash savings in 2009 when the government dumped the worthless Zimbabwe dollar in pursuit of the multi-currency system.
Zimbabwe currently uses a basket of foreign currencies ranging from the United States dollar, British pound, Chinese yen, South African rand, Botswana pula and the euro.
“In line with the policy pronouncement made by Finance and Economic Development minister (Patrick Chinamasa) in both the 2014 budget statement and the Mid-Term Budget statement, the Reserve Bank shall be demonetising the Zimbabwe dollar balances by June 30 2015,” he said.
“All genuine or normal bank accounts, other loan accounts, as at December 31 2008 would be paid an equal flat amount of $5 per account.
“The then prevailing United Nations exchange rate would be used to convert ZW$ balances that were a result of arbitrage opportunist ‘burning’ and for ZW$ cash to be received from walk-in banking public.”
The RBZ boss added that the central bank would soon publicise how the demonetisation process would work.
He said the significance of that move was to bring to finality the outstanding obligation by the government to the banking public and to formally announce the demise of the local currency.
“This is critical to buttress the government’s commitment to the multiple-currency system, which the government is committed to preserve,” he said, adding the policy might only change when the economy has turned around.
He said some of the factors that could force policy change included accumulation of foreign exchange reserves equivalent to one year of import cover by the RBZ, a massive improvement in the levels of domestic business, financial sector and consumer confidence, a massive drop in interest and inflation rates, ability of wages to keep up with prices and a healthy job market.
“The reality of the national economy is that all the above economic fundamentals or indicators are weak to even contemplate the return of the local currency,” Mangudya said.