Demonitisation: RBZ trying to forestall billion-dollar lawsuits

Google+ Pinterest LinkedIn Tumblr +

by Staff Reporter

news_bJohn-Mangudya-550

RBZ Boss John Mangudya

THE move by President Robert Mugabe’s government to demonitise the Zimbabwe dollar (Z$) is an effort to forestall possible lawsuits running into billions of dollars from individuals, organisations and businesses that were impoverished following the 2009 decision to abandon the inflation ravaged currency, theZimbabwenewslive  can reveal.

A government source said there were fears in government circles that some individuals and businesses could drag the Reserve Bank of Zimbabwe (RBZ) to court seeking compensation for losses incurred as a result of the sudden abandonment of the local unit without a proper transition to the current multi-currency regime.

“If someone sold, say a house, and the money was transferred to their bank account, and then they were unable to access it, and after some years they are being offered $5 surely this is an injustice that they can take to a court of law to correction,” the source said. He added: “Look, the trick is this… if you gave me a piece of paper written ‘I promise to pay the bear on demand’ and you told me that it is worth so much… them later you turn around and say it is now worthless and that is it, there is an element of unfairness there.”

The change-over from the Zim-dollar to the multi-currency regime which is primarily based on the United States dollar left virtually everyone with burnt fingers, with pensioners being the hardest hit.

The RBZ says it has set aside $20 million to for the demonitisation of the Zimbabwe dollar. The process would see bank account holders who as at December 31, 2008 had balances of up to Z$175 quadrillion being paid a flat amount of $5 and any balances above that being paid at the exchange rate of Z$35 quadrillion to $1.

Holders of Zim-dollar cash notes are also being offered various amounts per note, the highest payment of which is $2.

In his statement announcing the start of the demonitisation process—which is taking place seven years later—RBZ governor John Mangudya made it clear that the process was not compensation for loss of value of the Z$ due to inflation.

“Demonetisation is not compensation for the loss of value of the Z$ due to hyper-inflation. It is an exchange process. Demonetisation is an important and necessary process to align with best practice and, in the case of Zimbabwe, to comply with the multiple currency system. We cannot have two legal currency systems,” Mangudya said.

The sources said while people might not be able to sue for inflation-related losses, they could sue for losses resulting from RBZ’s failure to meet its side of the bargain by not immediately offering an alternative when a decision was made to dump the Z$ which had been battered by record inflation levels of upto 80 billion percent.

Under the governorship of Gideon Gono, the central bank made a lot of decisions of questionable legality under the excuse that these were necessary for sanctions-busting purposes.

The courts have already ruled that the RBZ—which raided foreign exchange accounts of individuals, non-governmental organisations and businesses—should reimburse them with interest.

The RBZ also owed mining houses millions of dollars for gold deliveries that were not paid for.

Share.
%d bloggers like this: