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Mthuli: USD Depositors To Be Compensated For Exchange Losses

3 years agoFri, 27 Nov 2020 15:21:03 GMT
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Mthuli: USD Depositors To Be Compensated For Exchange Losses

Finance and Economic Development Minister Mthuli Ncube said that depositors with small bank balances whose savings were wiped out by currency changes last year will be compensated.

In 2019, Treasury re-introduced the Zimbabwe dollar and removed its 1:1 pegging to the United States dollar resulting in depositors losing their savings as the value of the local currency plummeted.

Announcing the 2021 national budget on Thursday, Ncube said a US$75 million fund will be established to compensate depositors who had small balances of US$1 000 or less. Said Ncube:

As part of a broader reform process under the Transitional Stabilisation Programme, the government through the central bank introduced a market-determined exchange rate through the Monetary Policy of (SI 33 of 2019) 20 February 2019.

This entailed transition from an exchange rate of US$1:RTGS$1, initially to US$1:RTGS$2.5 and thereafter determined by the interbank market activities.

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This transition resulted in currency losses to small and vulnerable households with deposits less than US$1,000 in the bank. The movement in the exchange rate from US$1:RTGS$1 to US$1:RTGS$2.5 resulted in a loss for such depositors.

Therefore, the government has made a decision to compensate the small and vulnerable depositors who had US$1,000 and below for the exchange rate movement loss from US$1:RTGS$1 to US$1:RTGS$2.5, with resources equivalent to US$75 million.

The resources will be administered by the Deposit Protection Corporation.

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