RESERVE Bank of Zimbabwe (RBZ) deputy governor Kupukile Mlambo has urged government to set up a fund to compensate Zimbabwean dollar bank balances outstanding since the country’s switch over to the multi-currency regime five years ago.
Speaking at the Institute of Chartered Accountants of Zimbabwe (ICAZ) 2014 Investor Conference at the Legend Golf and Safari Lodge in Polokwane, South Africa recently, Mlambo told delegates that RBZ was currently in serious discussions with the Ministry of Finance and Economic Development on demonetisation.
“We need to set up a fund, which will be used for demonetisation. Where we say everybody can be given their money.
“We need to set up a fund, which will be used for demonetisation that anybody who had an account will be compensated. This is what I am thinking and it’s not official. But also will put in place an agreed rate, it might not necessarily be the official rate, but someone will be able to get at least this much for this amount,” Mlambo said.
During the inclusive government, then Finance minister Tendai Biti said Treasury had set aside $6 million to compensate Zimbabwean dollar balances. Biti said Treasury would not proceed with the process alleging that some accounts had been fattened overnight.
The Confederation of Zimbabwe Industries recommended three years ago that government should use the United Nations conversion rate of 35 quadrillion Zimbabwean dollars to US$1 on liabilities rising prior to the dollarisation of the economy.
Mlambo, however, said the current challenge was which exchange rate would be used.
“The challenge is what rate we should use for demonetisation. If we convert that at a black market rate, a lot of the accounts will receive nothing and also if we convert using the official rate it gets to billions and we can’t afford it, so we have to handle this very carefully,” Mlambo said.
He, however, said the bank was only aware of how much was in the banks at the time of demonetisation, but was not sure how much of the Zimbabwean dollars were outside the banking channels.