Maravi

(HERALD) Zimdollar mop-up to cost US$13m

Zimdollar mop-up to cost US$13m
Business Reporter

AT least US$13 million is needed to mop up the Zimbabwe dollar held with banks follow-ing a one-year suspension, Economic Planning and Investment Promotion Minister Elton Mangoma has said.

"The Zimbabwe dollar has died a natural death. Its funeral will cost about US$13 million, which is the estimate for mopping up the balances with banks and reserve money," Mr Mangoma told a workshop in Pretoria on Monday.

A decision would be made on "when and how" to reintroduce the national currency but this would depend on the performance of the productive sectors.

The South African Rand was chosen as the reference currency and books of accounts are being kept in either the Rand or United States Dollars.

Early this year, the government allowed the use of foreign currency as the local unit failed to sustain unprecedented hyperinfla-tion.

The highest note previously in circulation was a "rejected" $100 trillion Zimbabwe dollar note.

The Reserve Bank of Zimbabwe lopped off a total of 22 zeros from the local currency in the past two years.

Finance Minister Mr Tendai Biti told the Senate late last month Government was con-sidering buying the depositors’ money held with banks.

There has been uncertainty as to what would happen to depositors’ funds after the demise of the Zimdollar.

Banks are holding about $1,8 million depositors’ funds, according to the RBZ.

Many accounts are holding quadrillions which, accumulated through "burning" where people took advantage of the wide gap between the transfer rate and the cash rate. The transfer rate attracted higher returns.

Turning to the economic turnaround, Mangoma told the workshop, Government was committed to ensure that Zimbabwe "starts working again".

He said efforts would be directed towards reforms from both the political and economic arenas — to ensure there is a restoration of economic stability and growth, among other things.

"Stimulating investment has been adopted as one of the strategies for the restoration of economic stability and growth.

"The objective is to increase investment from the current level of four percent of Gross Domestic Product to a minimum of 25 percent of GDP," said Mr Mangoma.

The process to re-engage the international community was underway to mobilise support for the resuscitation of social services and utilities.

"A multi-pronged approach to engage the international community will focus on the unlocking of critically needed balance of payments financing, fiscal balance support, foreign debt rescheduling and renegotiations as well as clearance of outstanding external payment arrears," the minister said.

He said Zimbabwe would create a conducive investment climate for investors.

He urged South African investors to take advantage of the existing investment opportunities in Zimbabwe and advance lines of credit to assist the economy in recovering.

"There is a strategic window of investment wide open in Zimbabwe at the moment. There is a strategic window for the donor community to strengthen democracy in Zimbabwe and Africa at the moment.

"Let us seize the moment before this window shuts."

Labels: CURRENCY, INFLATION, NEOCOLONIALISM, ZIMBABWE DOLLAR

posted by MrK @ 4:41 PM