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ECONOMIC analysts have applauded the demonetisation of the Zimbabwe dollar initiative announced by Central Bank Governor, Dr John Mangudya, in his Monetary Policy Statement last Wednesday. Dr Mangudya said the Reserve Bank of Zimbabwe will pay out $5 for every Zimbabwe dollar account as compensation for account holders that lost their money in 2008 with the introduction of the multi-currency regime.
He said all genuine or normal bank accounts, other than loan accounts as at 31 December 2008, would be paid an equal flat amount of $5 per account by June 30, 2015.
“The then prevailing United Nations exchange rate would be used to convert Z$ balances that were as a result of arbitrage opportunities ‘burning’ and for Z$ cash to be received from the walk-in banking public,” he said. Demonetisation is the act of stripping a currency unit of its status as legal tender. It is necessary whenever there is a change of national currency.
Dr Mangudya said the demonitisation of the Zimdollar accounts was critical to buttress Government’s commitment to the multiple currency system and the Central Bank would soon publicise the modus operandi of the demonetisation process.
Economist Mr Prosper Chitambara said this was a positive move by the Central Bank Governor as he tries to push for the acceptance of bond coins on the market and restore confidence in the banking system.
“This is a positive step by the Central Bank. However, to get full support this will have to be done in a transparent manner and there will be need for public consultation for buy-in,” said Mr Chitambara.
Africa University business lecturer, Mr Thomas Masese, said the move was long overdue after Finance and Economic Development Minister, Cde Patrick Chinamasa, presented it in his 2014 National Budget Statement to no avail.
He applauded the development, but said there was need for visible action on the ground so that people know that it would not become another ‘talk-shop’.
However, generally most economic analysts credited Dr Mangudya for trying to tackle hanging issues head on especially in the banking sector, which is where the liquidity crunch is emanating from.
Dr Mangudya said the Central Bank would continue to monitor banks that were charging high interest rates above 10 percent per annum for their performing customers in the productive sectors of the economy.
He said the high interest rates were not sustainable and were the breeding ground for non-performing loans which RBZ is trying to rein in.
On the issue of bond coins, the Central Bank Governor said the RBZ would be launching a Consumer Rise and Shine awareness campaign for the promotion of bond coins in collaboration with the Consumer Council of Zimbabwe.
“In order to improve the distribution channel of bond coins with immediate effect all Easy Link Money Transfer Agent outlets shall supplement banks in making the coins available to the public without charging commission or withdrawal fees,” he said.
Dr Mangudya also announced that the $200 million interbank facility by the Africa Export-Import Bank was now operational. The interbank market facility is expected to address the circulation of funds within the local financial sector.
The facility will also be used as the precursor programme for the lender of last resort function by the Central Bank.
Mr Chitambara, however, added that Dr Mangudya should re-look into the debate for Zimbabwe joining the rand community instead of the existing multi-currency system.
He said the country’s exchange rate was currently overvalued because of the growing strength of the US-dollar to the rand.
Mr Chitambara said this was holding back the external competitiveness of local industry creating a ‘supermarket economy’ of imports influx and slowly destroying local industry.
In his Monetary Policy Statement, Dr Mangudya highlighted that the continued appreciation of the US dollar against the country’s major trading partners currencies had made imports cheaper thereby making local goods uncompetitive.
The Central Bank Governor also revealed that the country’s inflationary outlook was expected to continue to be influenced by the changes in oil and food prices as well as the South African rand/US$ exchange rate dynamics.
Online Reporter