Zimbabweans to be compensated fully as local currency is demonetized

Zimbabweans to be compensated fully as local currency is demonetized

HARARE, Feb. 23 (Xinhua) -- The Reserve Bank of Zimbabwe (RBZ) will use the rate of one U.S. dollar to 35,000 Zimbabwe dollars as it moves to demonetize the local currency and compensate account holders who lost their savings when the government introduced multi-currencies in 2009.

RBZ Governor John Mangudya told Xinhua in an interview Monday that everybody who had an account as of December 2008 would be awarded a blanket five U.S. dollars per account regardless of whether or not there was any credit in their bank balances.

Mangudya's comments allay fears that had beset the banking public which suspected that the RBZ wanted to credit the accounts with only five U.S. dollars and disregard the balances in the accounts at the time of the introduction of the multi-currencies.

The Confederation of Zimbabwe Industries also issued a statement recently urging the RBZ to fully compensate account holders.

"The five U.S. dollars is the minimum but we're going to be using the United Nations rate of one U.S. dollar to 35,000 Zimbabwe dollars. We have revalued it from one U.S. dollar to 35 quadrillion dollars," Mangudya said.

"This explains why the figure (to demonetize) has risen from the initial six million U.S. dollars to 20 million dollars," he added.

Former Finance Minister in the inclusive government Tendai Biti had indicated that six million dollars would be required to compensate account holders affected by the abandonment of the local currency in favour of mainly the United States dollar and the South African rand.

Other currencies acceptable in the banks are the Australian dollar, British pound sterling, Botswana pula and to a limited extent the Euro, Indian rupee, Chinese yuan and Japanese yen.

The local currency was literally made moribund in 2009 when the government sought to arrest runway inflation which then stood at 231 million percent at the last official count, even though unofficial figures put it at 4 billion percent.

To cope with inflation, the RBZ redenominated the Zimbabwe dollar in 2006, 2008 and 2009, with the highest being a 100 trillion dollar banknote printed on bond paper after the German company which used to supply it with the special paper stopped doing so because of economic sanctions imposed on the country.

The central bank would also occasionally slash the zeros from the notes amid concerns from businesses that the many zeros were crashing their computer systems.


The demonetization of the local currency will be completed by June 30, 2015, allowing many people who had stashed the Zimbabwe dollar in its various denominations to finally discard it.

2015-02-24

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