Government to compensate certain depositors for changing exchange rate from US$1:RTGS$1

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It’s unusual for Zimbabwe’s government to compensate victims affected by its awfully unjust decisions and yet they are going to do just that. During his presentation of the 2021 Budget Statement, Finance Minister Mthuli Ncube said government will compensate individuals who incurred loses as result of abandonment of fixed exchange rate of US$1:RTGS$1 and the simultaneous adoption of US$1:RTGS2.5 exchange rate which happened early last year.

The compensation doesn’t include everyone but just individuals who had deposits of less than US$1000 at the time of the abandonment of the US$1:RTGS$1 exchange rate.

….Government through the Central Bank introduced market determined exchange rate through the Monetary Policy of (SI 33 of 2019) on 20 February 2019. This entail transition from exchange rate of US$1:RTGS$1, initially to US$1:RTGS$2.5 and thereafter determined by the interbank market activities. Depositors. 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, Government has made a decision to compensate the small and vulnerable depositors who had US$1000 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 (DPC).

Mthuli Ncube during 2021 Budget Statement Presentation

The gesture to compensate some depositors is an indication that government is admitting it’s mistake to abandon the US$1:RTGS$1. Compensation is only for a certain bunch of depositors who government, says, are “small and vulnerable” yet choosing to ignore depositors who had over US$1000 when the exchange rate was abandoned. If the transition to US$1:RTGS$2.5 affected everyone then it’s only fair that everyone gets compensated.

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