Banks pay out $7m in Zim dollar compensation

via Banks pay out $7m in Zim dollar compensation | The Herald December 11, 2015

BANKS have paid out about $7,2 million in compensation for the demonetised Zimbabwean dollar, figures from the Ministry of Finance and Economic Development show.

The demonetisation process of the local currency began in June this year after the country adopted the use of multi currencies anchored by the US dollar in February 2009. It was meant to stabilise the economy and establish a credible nominal anchor under low inflation conditions.

By the end of November, total verified balances were $15,8 million; about $10 million was disbursed to the banks while 483 140 accounts were paid out. The number of paid out accounts represent 47 percent of verified balances. Clients of closed banks were paid about $826 000 while walk-in clients received $740 000.

The exercise will bring closure to the outstanding issue on the Zimbabwe dollar, further confirming Government’s position that the local unit will not return anytime soon. The Government has maintained the return of the Zimbabwe dollar would only be considered when key economic fundamentals such productivity in key sectors have been achieved.

Finance and Economic Development Minister Patrick Chinamasa said the demonetisation has helped to “restore public confidence on the continued use of the multi-currency regime”.

The replacement of Zim dollar by the multi-currency system brought hyperinflation and the currency devaluation to a halt, laying the foundation for strong economic recovery.

The average annual inflation between 2009 and 2013 was 3,3 percent, while the real gross domestic product grew on average of 8 percent a year. Apart from US dollar as anchor currency, Zimbabwe uses a basket of currencies which also includes South Africa Rand, Botswana Pula, British Pound, and Euro, Chinese Yuan, Japanese yen and Austrian dollar.

At the height of economic crisis, trading on the Zimbabwe Stock Exchange was stopped in November 2008 during a Reserve Bank of Zimbabwe crackdown on financial institutions and stockbrokers accused of allowing traders to use fraudulent cheques to purchase shares, only to resume three months after the introduction of multi-currency system.