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Govt Compensating Depositors Who Lost Forex Due To Zim Dollar Reintroduction

The government has announced plans to compensate depositors whose United States dollar bank balances were wiped out in 2019 when the Zimbabwe dollar was reintroduced.

Finance ministry secretary, George Guvamatanga, yesterday told NewsDay that depositors with values of less than US$1 000 were already being compensated.

Guvamatanga said the idea was to boost public confidence in the country’s banking system. He said:

We have done a research and people generally don’t have confidence in our banking system because of such issues and you will find that no one will come and say let me compensate my depositors somehow. That’s why the government is stepping in.

Depositors, whose balances were US$1 000 and below constitute the bulk of the beneficiaries. The main thing is to try and have market discipline again and the President has realised that the market has actually gone rogue again.

According to the Reserve Bank of Zimbabwe, total banking sector deposits amounted to $10.32 billion as of December 31, 2018, up from $8.48 billion as of December 31, 2017.

At the time, the banking sector was predominantly funded by demand deposits which accounted for 64.94% of total deposits as of 31 December 2018.

Since the reintroduction of the Zimbabwe dollar in June 2019, deposits have been going down with individuals and companies preferring to keep their huge sums of forex at home or on other premises.

Last week, President Emerson Mnangagwa announced various measures to restore confidence, preserve value and restore macroeconomic stability, which included restoration of lost value on bank deposits with a US$1 000 balance and below as of the end of January 2019

Analysts say the government-created problem will affect efforts to revive the economy since taxpayers’ money will be diverted from developmental issues and be used to refund the depositors.

More: NewsDay; Pindula News

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