Finance minister Tendai Biti is on the verge of gazetting a statutory instrument which will, among other things, seek to demonetise (to withdraw a currency from further use) the Zimbabwe dollar, businessdigest has established.
Sources this week said Biti wanted to gazette the legal instrument and demonetise the defunct local currency, which was abandoned in 2009 after hyperinflation reduced the unit to a worthless piece of paper, forcing government to allow the use of multi-currencies.
The sources said banks were, however, worried by Biti’s lack of consultation on the long winding matter.
“Banks and the central bank itself were not consulted on the matter and banks have basically resolved to let him do as he pleases,” a banking source said.
Although this would put closure on the matter, outstanding issues of the value of the Zimbabwean dollars stuck in banking systems remain a far cry.
The move by Biti also allays fears that the Zimbabwe dollar could make a comeback after Zanu PF, at its congress last year, resolved to bring back the local currency.
Sources said Biti’s move could also raise the spectre of insurance companies liabilities and all other outstanding debts being brought up. It was, however, not clear who was going to fund the demonitisation.
Attempts to reach Reserve Bank of Zimbabwe governor Gideon Gono at the time of going to print proved fruitless as he was said to be out of the country since last Friday and only expected home end of next week.
Treasury last year was yet to determine the exchange rate to use in settling payments of Zimbabwean dollar account holders.
A committee comprising officials from government and the Bankers’ Association of Zimbabwe was set up to work on the requisite details and modalities to operationalise the process. Initial projections said funds for the demonetisation programme were estimated at US$6 million.
When reached for comment this week, Biti said a formula to calculate indebtedness was being worked on.
He said although the need to have an exchange rate formula had been necessiated by a court ruling in labour disputes dating back to the Zimbabwe dollar era, the same formula would also be applicable in all instances of indebtedness.
“All indebtedness will be calculated on the basis of the same formula,” he said. But Biti would not be drawn to say if he would gazette a statutory instrument.
A source said banks had a series of meetings facilitated by Ministry of Finance officials this week to thrash out the issue.
The demonetisation of the Zimbabwe dollar would effectively end its role as a unit of account, medium of exchange and store of value and reduces the country’s currency regime to a dual currency system anchored on the South African rand and the United States dollar.