Zimbabwe government announces plan to buy up worthless currency

Zim dollar is not coming back – Biti

Written by Kingsley Kaswende in Harare, Zimbabwe
FINANCE minister Tendai Biti has said the Zimbabwean government will spend US $6 million to buy back the defunct Zimbabwe dollar from the public, warning that any attempts to resuscitate the local currency will force him to quit.
He told the Institute of Chartered Accountants of Zimbabwe Winter School in the resort town of Nyanga over the weekend that he would quit the inclusive government if he is forced to resuscitate the Zimbabwean dollar, because he is determined to ensure that his policies are not reversed.

"The most important thing is that the Zimbabwe dollar is not coming back. If I have to bring the Zimbabwe dollar back into circulation, I will go back to my law firm at 200 Herbert Chitepo Avenue," said Biti, who is partner at a Harare law firm, Honey and Blanckenberg.

The Zimbabwe dollar was abandoned in February this year when it could not cope up with the severe hyperinflationary situation.

The 20-plus digit hyperinflationary environment, which became more severe in 2008, left the Zimbabwean dollar valueless, leading to the adoption of multiple currencies, dominant of which is the US dollar and the South African rand.

Presenting the mid-term budget review last Thursday, Biti said he had reserved US $6 million to mop up the Zimbabwe dollar, saying the demonetisation of the local currency would allow the government to start accounting using the US dollar.

"I propose the demonetisation of all the remaining Zimbabwe dollar balances held by the financial sector as well as notes and coins in circulation," he said. "Formal demonetisation should allow for settlement of all remaining Zimbabwe dollar transactions and obligations prior to the introduction of the multiple currency system as well as the revaluation of all other Zimbabwe dollar balances for accounting purposes. At the present moment, estimates indicate that about US $6 million will be required to purchase the entire stock of Zimbabwe dollar balances with banks as well as cash outside the banking system."

However, he did not say at which exchange rate at which the defunct currency will be bought.

"The conclusion of this process will officially bring to an end claims on the use of the Zimbabwe dollar as a unit of account, medium of exchange and store of value. Government will, therefore, maintain the use of multiple currencies, whilst addressing the attendant challenges such as improving the liquidity of the domestic financial system, challenges of smaller denominations and change in business transactions, in as well as standardising currency use in accounting," Biti said.

He said the review of use of multiple currencies will be undertaken once there was clear evidence of a strong economy, characterised by a sound track record of policy consistency and implementation, a sustainable external position, and a strong financial sector, necessary to support and sustain the desired currency regime.

"Such a review will also consider a number of currency regime options, guided by the SADC objective of achieving a unitary currency by 2018," said Biti.



http://www.postzambia.com/content/view/11392/50/