HomeNewsZ$ depositors to get US$5

Z$ depositors to get US$5

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THE Reserve Bank of Zimbabwe (RBZ) will demonetise the Zimbabwe dollar (Z$) balances by the end of the first half of this year with all genuine account holders receiving $5 per account.

BY VICTORIA MTOMBA

In his Monetary Policy Statement yesterday, RBZ governor John Mangudya said $20 million would be used for the demonetisation process.

Demonetisation is the process in which a particular currency or valuable mineral is degraded as a legal tender.

“In line with the policy pronouncement made by the Minister of Finance and Economic Development in both the 2014 Budget Statement and the Mid-Term Budget Statement, the Reserve Bank shall be demonetising the Z$ balances by 30 June 2015. All genuine or normal bank accounts, other than loan accounts, as at 31 December 2008 would be paid an equal flat amount of US$5 per account.

“The then prevailing United Nations exchange rate would be used to convert Z$ balances that were a result of arbitrage opportunities — ‘burning’ — and for Z$ cash to be received from the walk-in banking public,” Mangudya said.

He said the central bank would publicise the modus operandi of the demonetisation process.

Mangudya said the significance of the move was to bring to finality the outstanding obligation by government to the banking public and to formally announce the demise of the local currency.

Many people lost their money when the country adopted the multi-currency regime in 2009.

Mangudya said credit risk remained a challenge as evidenced by the average non-performing loans (NPL) to total loans ratio of 16% as at December 31 2014 compared to 20% as at September 30 2014.

“The decline in the NPL ratio noted over the quarter is largely attributable to the closure of Interfin and Allied banks and general improvement in loan quality in a few banks,” he said.
The government, through its special purpose vehicle Zimbabwe Asset Management Company (ZAMCO), has acquired NPLs amounting to $65 million to date using other funding mechanisms provided in its funding strategy.

The first phase of ZAMCO will focus on NPLs that are secured and are not for insiders to prevent creating a moral hazard in the banking sector.

“As part of the preparatory work, the Reserve Bank in conjunction with ZAMCO carried out a market-wide exercise in December 2014 to ascertain the level of NPLs that meet the eligibility criteria. Banking institutions will, by 31 March 2015, be advised of NPLs in their respective loan portfolios that meet ZAMCO’s eligibility criteria,” Mangudya said.

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