DPC compensates Zim dollar accounts

HARARE - The Deposit Protection Corporation (DPC) says it has begun compensating Zimbabwe dollar account holders for banks under liquidation.

This comes after the central bank in June this year announced that it would demonetise the local currency and compensate account holders who lost their savings when the government introduced multi-currencies in 2009.

“Accordingly, DPC shall pay any person who was a holder of a Zimbabwe dollar denominated bank account for AfrAsia Bank Zimbabwe Limited (In Liquidation) and Allied Bank Limited (In Liquidation) as at December 31, 2008 the equivalent United States dollar amount for each account balance converted by the UN exchange rate of $1 to Z$35 Quadrillion,” the Corporation said yesterday.

Under the latest arrangement that will last until April 2016, DPC is going to pay $5 for every account that was held with a balance of zero up to one hundred and seventy five quadrillion Zimbabwe dollars.

“For any Zimbabwe dollar balances above one hundred and seventy five quadrillion Zimbabwe dollars at the rate of one United States dollar to thirty five quadrillion Zimbabwe dollars,” DPC said.

The move, which is aimed at restoring public confidence on the continued use of the multi-currency regime, had by end of September this year seen $8,8 million being paid out to Zimbabwe dollar account holders out of a budgeted $20 million.

The demonetisation process will expunge Zimbabwean notes from the country’s banking system, which now includes a combination of US dollars, South African rands, and Botswana pulas, in an effort to move past the horrific episode of hyperinflation that occurred in 2008.

While the official inflation figure during that time was recorded at 231 million percent, others have suggested the actual inflation rate was greater than four billion percent.

Zimbabwe’s economy plunged into crisis after the government started a campaign in 2000 of violent seizures of white-owned commercial farms to distribute to black subsistence growers, slashing exports of tobacco and other crops.

The economy began expanding and the recognition of foreign currencies as legal tender helped tame inflation, under policies implemented by a coalition government in 2009.

Reserve Bank of Zimbabwe governor John Mangudya early this year said Zimbabwe needs to increase its foreign reserves, improve its fiscal management and strengthen the financial sector before it can change the current multi-currency system.

“We cannot have two legal currency systems. We need therefore to safeguard the integrity of the multiple-currency system or dollarisation in Zimbabwe,” he said.

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